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Should a client consider a high-leverage DST for a Section 1031 exchange? Thumbnail

Should a client consider a high-leverage DST for a Section 1031 exchange?

Taxes

From time to time, I come across clients that have fallen short of replacement value and/or only have limited "boot" left.

Recently, a couple was referred to me who had this very situation occur in their 1031 exchange. They fell short of replacing their sold property by $53,000, but only had $5,800 of boot left. I recommended a zero-coupon DST (+80% leverage) that I recently had done due diligence on that would allow them to leverage their boot + $4,000 of additional cash to purchase $55,000 of replacement property. This strategy could be a financial lifesaver for them and allow them to defer all taxes on the property exchange.

This is what I do best: solving problems and fixing sticky financial situations.

Also, when clients are referred to me, I always insist on working with their QI and/or CPA to make sure the numbers are right.

If ever you (or a client) are in a complicated situation, please do not hesitate to contact me.