Testimonial
“As far as Assets Under Management [growth] is concerned… to give you a number: close to 30 million.”
Antonia Buban
Founder, Buban Financial Services
Sell your appreciated property—no capital gains tax, no depreciation recapture at the trust level. Reinvest the full proceeds in a diversified portfolio and eliminate the headaches of active management forever.
Long-term real estate owners face a double tax burden on sale: capital gains on appreciation plus depreciation recapture taxed at 25%—before the 3.8% net investment income surtax. In high-tax states, the combined rate can approach 40% or more. A 1031 exchange defers the problem without solving it, and keeps you concentrated in real estate.
A §664 Real Estate Shelter Trust eliminates the tax entirely at the trust level. Contribute your property, and the trust sells it—keeping 100% of the proceeds to reinvest in any diversified portfolio your advisor selects.
“As far as Assets Under Management [growth] is concerned… to give you a number: close to 30 million.”
Sterling and your legal advisors create a §664 charitable remainder trust. You name yourself and chosen family members as income beneficiaries over a 50–60 year term.
The real estate is transferred to the trust. The transfer itself does not trigger a taxable event. Any existing debt on the property is addressed in the structuring process.
Because the trust is tax-exempt under §664, it sells the property and retains 100% of the proceeds. There is no capital gains tax and no depreciation recapture at the trust level.
Your financial advisor invests the full proceeds in an appropriate portfolio. You may take regular distributions or defer them for continued tax-deferred compounding.
Bob is a widower, age 79, with three adult children. He owns a 12-unit San Diego apartment building worth $4,000,000 with a basis of $180,000. Selling outright would cost $1,417,220 in combined capital gains and recapture taxes, leaving only $2,582,780. Sterling recommended three Real Estate Shelter Trusts—one for each child to receive income after Bob’s lifetime.
Unlike a direct sale or 1031 exchange, the trust pays no depreciation recapture tax—eliminating one of the most significant hidden costs of selling long-held real estate.
Proceeds can be reinvested in virtually any asset class your advisor selects—not another property. You finally achieve the diversification a 1031 exchange can never deliver.
No more tenants, maintenance, vacancies, or liability exposure. Convert an active, illiquid asset into a professionally managed, diversified portfolio.
Structure the trust to provide income for yourself, your spouse, and your children and grandchildren over a 50–60 year term—creating a lasting family legacy.
Spendthrift provisions protect trust assets from creditor claims—giving you and your beneficiaries an added layer of security beyond the diversification itself.
A 1031 exchange defers tax but keeps you concentrated in real estate. A Real Estate Shelter Trust eliminates the tax and lets you diversify into any investment your advisor recommends.
Long-term real estate owners often face taxable gains from both increases in market value and depreciation recapture, which is taxed at 25% plus the 3.8% surtax. Here is how the four common strategies compare.
Sell the property and reinvest the after-tax proceeds. Simple and provides complete liquidity.
Exchange into a like-kind property to defer capital gains tax.
Sell for a combination of cash and a qualifying note under §453, spreading gain realization over multiple years.
A tax-exempt trust under §664. Contributions of appreciated real estate are tax-free, and the trust sells the property with no capital gains tax and no depreciation recapture at the trust level.
See the full side-by-side comparison: Comparing Your Options →
Sterling has helped property owners across the country convert decades of appreciation into lasting, diversified income streams. Schedule a conversation to explore your options.
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