3 tax-smart ways to exit appreciated real estate

There are four potential types of taxes due when selling highly appreciated real estate: depreciation recapture, capital gain, net investment income tax, and state income tax. This often results in approximately 25-40% of your gain going to taxes. 

Selling outright and paying the tax can often be the right strategy, particularly if you desire maximum liquidity and flexibility.

However, if you wish to defer, mitigate, or eliminate some or all taxes at the time of sale, review the three strategies below.

1.   1031 Exchange

 --> can make sense if you want to stay 

 active in real estate and are looking to 

 grow, upgrade, or reposition your 

 portfolio.

2.   1031 to a Delaware Statutory Trust (DST)

 --> can make sense if you want to 

 retire from active management, 

 simplify your life or get off the “1031 

 hamster wheel.”

3.   Charitable Remainder Trust (CRT)

 –-> can make sense if the asset is not 

 a core part of your retirement 

 plan, you have charitable inclinations, 

 and you wish to continue to receive an 

 economic benefit in the form of income.

Preserve Private Wealth is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specic securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.