Can I Cancel or Change a Deferred Sales Trust after Starting?

deferred sales trust

Deferred Sales Trusts are complex and many taxpayers have questions they want answered. This article will answer the question: “Can I cancel a Deferred Sales Trust after Starting One?”

Cancelling or Changing a Deferred Sales Trust

When you sell a property under an installment sale such as a Deferred Sales Trust, once you sell the property the transaction is set in stone. Whatever arrangement you have with the trustee (to whom you sold the Relinquished Property), for you to receive payments over time that arrangement is locked and loaded, and that's the way it has to be. So if you have a 10 year note with the trustee, that's the arrangement you have made and that's the arrangement you and the trustee should expect to stick with.

It is Still Theoretically Possible?

That's not to say it's not theoretically possible to approach the trustee and say “hey can we extend or change this note and move the balloon payment out or in further?”

You can probably reach an amenable agreement with the trustee to increase or decrease the loan term, but you don't want to be going back to the trustee every few days asking to change things. The sale is a “done deal” and you don't want to be going back to the trustee to try to reconfigure the arrangement. The arrangement is what you made and the deal that you made is the deal you should stick with. Otherwise it looks like the trustee is just a patsy or your agent (acting on your behalf) who will do anything you request; and that your sale to the trustee was a sham and not a real economic transaction with a principal.

  • 1031 Hotline: If you have questions about cancelling a deferred sales trust after starting, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.


© 2016 Copyright Jeffrey R. Peterson All Rights Reserved.