When Should You Consider a Zero-Coupon DST in a 1031 Exchange?

In a 1031 exchange, 100% capital gains tax deferral typically comes down to three key elements:

  1. Value

  2. Equity

  3. Debt

A 1031 exchange of real estate is not just about finding the right replacement property, it is about continuing the investment in a way that accounts for value, equity, and debt. To that end, in order to defer 100% of your capital gains tax burden, you need to:

  • Buy replacement property that is up or equal in value to the relinquished property

  • Reinvest all equity and net proceeds

  • Replace debt or add cash to offset debt relief as needed

The debt piece is often where planning gets complicated. A zero-coupon DST may help solve the debt piece of this puzzle. A zero-coupon DST can be one tool used to help offset debt from the sale of a heavily encumbered real property.

How a 1031 Exchange can Help You Save in Capital Gains Taxes

A 1031 exchange can help you save money in capital gains taxes when you reinvest your sales proceeds into a replacement property of equal or greater value, equity, and debt. The 1031 exchange is a tool available to all United States taxpayers. No matter where you are in the country, or how big or small your property is, you may be a good candidate for 1031 exchange tax deferral. Contact a qualified intermediary at CPEC1031, LLC to learn more about the 1031 exchange process and see how we can help you through the ins and outs of the like-kind exchange process.

  • 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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Defer the tax. MAXIMIZE your gain.

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