I had been pestering my CPA/CFA for years on how to sell my loan-free 4-plexes without paying huge capital gains due to an 8x increase in property value and almost complete depreciation over 25 years of ownership.

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    He didn’t have an answer other than to play games with exchanging for a single-family home and years later moving into that property (something the IRS may allow but doesn’t like). I found Archer while I was marketing one of my properties. The Archer team didn’t mind all my questions, and if they didn’t know the answer, we conference-called the sponsors. In the end, I exchanged each of my buildings for multiple DSTs, over a period of 5 years, breaking three lumps of capital into fifteen. The DSTs have rolled over about every 6 years, so I can either exchange the old DST into a new DST or I can cash out if I need capital. Cashing out means I pay capital gains, but only on the one DST that sold so I’m not pushed into a high tax bracket. The return on investment is twice what it seems because ALL of my money from the 4-plex sales is still invested. If I had sold them instead of exchanging, I would only have roughly half the amount invested now. Also, how much you make is less important than how much you keep. My DSTs are leveraged with an average of about 50% loan to value, which means I depreciate twice as much as I invest and I’m in a 15% federal tax bracket. The best part is that I escaped increasingly onerous state restrictions on landlords (for example it’s now illegal to request a SSN for a credit check) and I no longer have to repair or rent out my own apartments. Freedom is priceless.

    Steve E, Belmont, CA