We’ve talked about Deferred Sales Trusts before and how they can be a viable alternative to 1031 exchanges. But there are a lot of questions surrounding DSTs. In this article, we are going to answer three frequently asked questions about deferred sales trusts.
Is a Deferred Sales Trust a Tax Loophole?
No, a deferred sales trust is not a loophole. Section 435 of the Internal Revenue Code (which defines DSTs) has been in the code for a long time, and many taxpayers sell property under installment arrangements. In short, DSTs are a completely legitimate tax strategy.
Will I Be Audited if I do a Deferred Sales Trust?
Audits are always a possibility, no matter who you are. However, contrary to popular belief, merely engaging in a 1031 exchange or deferred sales trust transaction does not make you a more likely target for an audit.
After Starting a DST, can I sell Additional Property?
Absolutely. After you have the deferred sales trust set up you can add additional properties. This can get a little complicated so make sure you are working with a qualified intermediary to make sure you have all of your details covered.
CPEC1031
At CPEC1031, LLC, we employ qualified intermediaries who specialize in 1031 exchanges of real property. With more than 20 years of experience, our team of intermediaries can walk you through every step of your exchange from beginning to end. Our primary office is located in downtown Minneapolis, but we work with clients throughout the state of Minnesota, the Greater Midwest, and across the United States. Contact us today to learn more about our 1031 exchange services and start deferring your capital gains taxes on the sale of real estate!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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