Swap Till You Drop – Using 1031 DST Properties to Leave Your Heirs In Good Hands

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    If you’ve arrived here, you’re likely interested in a 1031 Exchange Delaware Statutory Trust (DST) to defer costly capital gains taxes. Our main service is helping real estate investors like you find the best DSTs that will provide substantial returns for years to come.

    Thinking Ahead with 1031 DST Properties

    While 1031 DST properties typically produce healthy income with minimal effort, are you considering the future? More specifically, what you’ll leave to your heirs? To take care of your loved ones after you pass, you must make wise choices regarding your 1031 DST properties. In this blog post, we’ll explore how to leverage your 1031 Exchange DST to benefit your heirs.

    Swap Till You Drop

    One of the most enticing benefits of a 1031 DST properties is deferring capital gains taxes. Anyone who has invested in real estate knows how significant these taxes can be. Transferring property ownership without facing a massive tax expense is invaluable. However, the government will eventually collect those taxes once you sell your 1031 Exchange DST property.

    How do you enjoy the benefits of real estate investment, defer capital gains taxes, and leave your heirs with assets instead of liabilities? The answer is simple: swap till you drop.

    By continually exchanging one property for another, you can indefinitely defer paying capital gains taxes. The best part? These taxes aren’t transferred to your heirs, meaning they’re off the hook as long as you own the exchanged real estate when you pass.

    By “swapping till you drop,” you can enjoy a steady stream of real estate investment income throughout your life and rest easy knowing you’ve left your heirs a significant advantage.

    What Happens Next?

    You may not be around to see how your heirs manage their inherited assets, but it’s crucial to understand the process to make prudent financial decisions and help them prepare for the future.

    Your heirs will receive a step-up in cost basis equal to the fair market value at the time of your death. This means they will “acquire” the property at its current market value, not what you originally paid for it. This step-up is critical if your heir decides to sell the property.

    Example Scenario

    Consider a hypothetical example:

    You bought a property five years ago for $100,000, and at the time of your death, it’s worth $400,000. If your son inherits the property and sells it for $550,000 without a step-up in cost basis, he would face capital gains taxes on $450,000. Ouch!

    However, with a step-up in cost basis, the original purchase price is irrelevant. Instead, he would pay taxes based on the market value of the property when he inherited it. So if he sold it for $550,000, the capital gains tax would only be on $150,000. He could also defer this tax by reinvesting the proceeds into like-kind real estate via a 1031 Exchange DST.

    Importance of Timing

    The timing of ownership is crucial. Signing your heir as a joint owner might seem easier, but this would make them liable for the original market value. To benefit from the step-up in cost basis, ownership must be transferred after the original owner’s death.

    That’s why working with real estate investment professionals like our team at Archer Investors is essential. Without understanding these details, you might make choices that seem easy but ultimately disadvantage your heirs.

    By strategically utilizing 1031 DST properties, you can ensure your heirs are well taken care of without the burden of significant capital gains taxes. At Archer Investors, we help you navigate these complex decisions, providing expert advice and access to the best 1031 DST listings. Let us help you optimize your investments and secure your family’s financial future with DST real estate. Explore DST 1031 properties for sale today and plan a prosperous tomorrow for your loved ones.