198 - Is Your Money Working Hard, or Hardly Working - Brett Swarts

Is your money working hard, or hardly working? Brett Swarts, the
founder of Capital Gains Tax Solutions, shares the strategies and
solutions he uses to free his clients from feeling trapped by
capital gains tax. He shares some examples, reveals how it works,
explains why it’s totally legal, and changes the way you’ll look
at trusts, taxes, and investing forever. Listen in to hear
Brett’s advice on what to do during this tough time in the market
- and get a glimpse into what can be done to build and preserve
your wealth for years to come. 


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Time Stamped Show Notes:


00:40 – Introducing Brett who, at a young age, helped his
father with real estate buying, selling, and building residential
properties in the Bay area

01:10 - He later learned about real estate investing and
fell in love with helping people find real estate investment
solutions

01:45 - When the 2008 crisis hit, he set out on a journey
to help his family and friends escape feeling trapped by
capital gains tax

02:05 - Now he educates about the 1031 tax-free exchange
and the capital gains solutions people can use



03:50 - The issue is taking on too much “dumb” debt

03:50 - During this time, you want liquidity and
diversification; you don’t want to buy a property just to
buy, you want to wait until you can buy for a lower price

04:10 - The 1031 can sometimes force people to buy high
and buy something of equal or greater value, which means
equal or greater debt

04:20 - A gentleman in Georgia who just closed moved his
funds to a deferred sales trust to protect his wealth and see
what pans out with the pandemic

05:15 - Don’t overpay for a property just to pay less tax



06:00 - Advice Brett gives to his clients when emotions are
running high

06:25 - Build a team around you of people that have your
best interest in mind that can help guide you

06:55 - Have a tax-deferred optimal-timing wealth plan,
diversify, take on more reserves, and maybe sell a property
that still has its value

07:30 - Move into a strategy of preservation; the largest
wealth transfer in the history of the U.S. is coming because
of baby boomers

08:50 - They want to fund their retirement, travel,
release liabilities, and get rid of debt but they’re faced
with a capital gains tax

09:10 - A deferred-sale trust could be a way to work
around that, diversify, and get liquid

10:00 - You need to know your vision, state in life, and
goals to set up a plan that works for you; the people you
work with need to provide more value than ever

11:15 - Trade illiquid assets and turn them into liquid
ones, and do it all tax-deferred



11:30 - More on the deferred trust

11:35 - It’s through tax code IRC 453, which is also
known as an installment sale, a seller carryback; their
version is through IRC 1031, which has timing restrictions

12:00 - Most notes go for ten years, can be renewed, and
can be passed to your kids inside a living trust, remaining
tax-deferred

12:30 - You can buy a new property with those funds,
still tax-deferred



13:14 - Their average client

13:15 - Their average deal is $2.6 Milion and they defer
around $400,000-500,000 in liability; their minimum is
$500,000 of proceeds and $100,000 in tax liability



14:50 - As an agent, remind your clients that they don’t have
to plow through all they have and more into their next home


15:20 - These deferred sales trust solutions work for
many things, including businesses and even horses 



17:30 - A hypothetical

17:50 - If someone sells an asset for $1.9 Million, pays
off all their debt, and puts about $800,000 into the trust;
now, it can be invested into whatever, whenever

18:12 - The only limitation is that 20% of it must stay
liquid; funds are directed from the trust directly to the
real estate asset



18:50 - How ownership works within the trust

19:30 - You own it within a JV partnership with the trust
so you get a brand new depreciation schedule; you can form an
LLC and partner with the trust

20:40 - The trust acts as a silent partner; you can have
one trust with multiple notes



23:15 - How to contact Brett: The Capital Gains Tax Solutions
podcast, YouTube channel, and website - and be sure to grab their
free guide on the site



3 Key Points
Don’t overpay for a property just because you want to pay less
tax.  Human nature is to buy high and sell low because you let
your emotions overrun you.  It’s complicated: Get a
professional to help you navigate tax solutions.