ABOUT

What Is The Landlord Exit Strategy?

We use a combination of two important tax advantaged programs, Opportunity Zones and Delaware Statutory Trusts, designed to allow landlords to exit the headaches of direct property management, eliminate or mitigate taxes and still enjoy the benefits of real estate investing. These tax advantaged programs can be used separately or together depending on your individual goals.

What Are The Benefits?

The Tax Cuts and Jobs Act of 2017 included a section entitled the Investing in Opportunity Act. This new law created what many are saying could be the biggest tax break in U.S. history, the creation of what are known as “Opportunity Zones”. The Act allowed the governors of each state and heads of all U.S. territories to designate certain areas in their states and territories as “Opportunity Zones”. Each Opportunity Zone has to be in an area that is economically distressed based on certain census criteria. All fifty states and U.S. territories participated and created over 8,700 Opportunity Zones.

Tax Breaks

  • OZ investments receive Tax Deferral, Tax Reduction, Tax Elimination and Potential Tax Free Income. Tax on the capital gains invested is deferred until 2027. If the OZ investment is held for 5 years, the original tax is reduced by 10%. If the OZ investment is held for 10 years or longer, all of the appreciation on the OZ investment is tax free including no recapture tax. And income derived from the OZ investment along the way can potentially be tax free.

Separation of Basis and Capital Gains.

  • You can use the basis portion of the sale proceeds of your property for anything you would like and invest the capital gains portion (including recapture) into an OZ investment with no tax (including recapture tax) being due at the time of the property sale. You can’t do this with a 1031 exchange.

Diversification

  • Diversify your portfolio with real estate. You can choose where to invest geographically from properties around the country, as well as the types of properties you want to invest in.
What Are The Benefits?

Passive Investing

  • Relinquish the burden of managing properties and exchange them for freedom without giving up the benefits of real estate investing.

Tax Benefits

  • As a 1031 exchange, landlords can sell their investment properties, defer all income tax on the sale of the properties and avoid leaving a tax burden to their heirs with a step-up in basis upon their demise.

Income Generation

  • Collect monthly income on-time with no worries about maintenance, repairs or vacancies with a portion of this income being received potentially tax free. Also participate in increasing income based on any applicable rent increases.

Value Appreciation

  • Capture your share of any appreciation of the DST investment properties.

Diversification

  • You choose investments offering various geographic locations, property types and debt leverage.

An Example of a Landlord Exit Strategy Plan

Sue (64) has built an impressive portfolio of 6 re