How Capital Gains Tax Solutions helps sellers defer taxes, diversify, and time the market.
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Show Notes:
In this episode, Adam Torres interviews Brett Swarts, Founder and CEO of Capital Gains Tax Solutions, on the Deferred Sales Trust (DST)—a flexible strategy to defer capital gains beyond the constraints of the 1031 exchange. Brett explains DST use cases across real estate, businesses, stocks, and Bitcoin, addresses common myths, and shares how clients use DSTs to diversify, avoid forced debt replacement, and build truly passive income on their own timeline.
About Capital Gains Tax Solutions
Capital Gains Tax Solutions helps business and real estate owners avoid paying 30–50% in capital gains tax when selling their assets. The company trains financial advisors, business brokers, CRE operators, luxury realtors, and CRE brokers to use a Deferred Sales Trust to create a wealth plan that achieves tax deferral, freedom, liquidity, and diversification—so clients stop feeling trapped by the 1031 exchange or frustrated with depleting wealth. This empowers business professionals to add value and grow their business.
For business owners selling their assets: Capital Gains Tax Solutions provides a tax-deferred wealth plan to help them save and defer 30–50% of their gain.
For highly appreciated primary homeowners selling their homes: the company offers a tax-deferred wealth plan that eliminates the need for the 121 exclusion and helps them save and defer 30–37% of their gain.
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to mission matters.com and click on BE our guest to apply. All right, today I have Brett Swarts on the line, and he’s a founder and CEO over at Capital Gain Tax Solutions.
Brett, welcome to the show. Adam, grateful to be here. Thank you for having me. All right, so we got a lot to talk about today. So we’re gonna get into the deferred sales trust strategies and what those are for those that don’t know and how you’re using them to help defer capital gains taxes. And I want to get into that and also some of that.
I’ve had these conversations in the past when it came to things like real estate and maybe some other. It’s like that. But I haven’t had a conversation on, some of the like, things like maybe Bitcoin and if that applies to using these types of trust strategies for deferring capital gains.
So we’re gonna get into that more. But before we do, how’d you get into this business? I’m curious, like how’d you get into this business? It’s interesting. Yeah, I grew up in California, mostly in the Bay area, helping my parents buy and sell property at a young age build it mostly actually.
And then actually started to help people at Marcus and Milch buy and sell multi-family property. And the 2008 crash hit and clients’, friends, family lost all their wealth or a lot of their wealth. And mainly due because of the, poor decisions a lot of people made with 10 31 exchanges and or just not selling at the proper time due to capital gains tax.
Not having a good solution for that beyond a 10 31 exchange. And that’s when we discovered the strategy we’re gonna talk about and how it works and why it can really transform the wealth building machine for most real estate entrepreneurs, or even just business entrepreneurs or even now Bitcoin people who really.
Have made it a big big gain in their, in their holdings. Mm-hmm. So I want to go back into how long have you been in this business, by the way, just roughly? 2006 is when I started Market two. Military two, six. Mm-hmm. So we’re going on, 20 years there. Oh my gosh.
Doesn’t time fly fast? You’re like, oh man, why’d you date me? Well, I’m just saying. That’s when you get to that age and you start to say, you know, you know, he had college buddies for X amount of years. Right. That’s funny. Yeah, exactly. I’m there too. It’s okay, bro. It’s fine. Mm-hmm. Uhhuh Uhhuh. So I wanna take you back there for a bit to the early days of when you were getting to know what this DST kind of really was, deferred sales trust.
Like, did anything surprise you as you were learning about the product as you were just kind of, you know, getting your feet wet? Like what surprised you about it? Yeah, I think the was surprising is just how flexible it is mm-hmm. Compared to, again, the 10 31 that’s not as flexible with the, with the 45 days to identify 180 days to close and, and just how many assets you could use it with.
And I think the biggest thing was as real estate, I guess you. Investors or, or people, if they’re listening, it’s, well, we, typically know when it’s a high market or like when things are hot. Like we knew when interest rates are still low, that we were in like, multiple high mark, you know, high years and we’re like, gosh, these things gotta change.
We knew that and you know, years you say, we say hindsight three years, you know. 2020 vision if you had it. Well, we kind, we really knew. And same thing kind of in oh oh 5, 0 6, like we knew it was something was like, gosh, this thing is just too hot for too long. And the ability to sell and be strategic with time.
Right. And, so that’d be number one. Number two would be the truly passive income aspect of this. You know, most of us want to accelerate. To the rich dad, poor dad, fourth quadrant on the bottom right. But most never achieve that. Most stay in the, you other three quadrants and the bottom right is when money, money really is working for you and you’re not having to training your time for any of it, right?
I call this truly passive income. I think we’ve, there’s a myth out there of, you just get this passive income, but it’s always this fleeting thing because especially, especially in places like California where I grew up, it’s just so. Challenging to own and operate. Businesses are real estate and people want to achieve that fourth quadrant.
And so just how much of an accelerator this deferred sales trust is to that fourth quadrant is the game changer. I think when most people see it, they realize it’s not just a tax referral strategy. It is a wealth building machine that unlocks truly passive income. And the last point about that is we believe that truly passive income.
Is to your freedom and impact as compounding interest is to your money. And it’s 10, 20, 30, 40, $50,000 a month, whatever it is. But if we could unlock that piece there where you’re not trading any of your time for that number, that’s the game changer to just open up lots of, the big domino to open up lots of freedom and lots of opportunity.
Hmm. let’s take that further. So, and I guess let’s start with, let’s start with the real estate side of things, because I want you to go deep into kind of explain how this works, but maybe let’s, before we move into like Bitcoin or maybe some of the other assets, let’s, let’s start with just real estate because I feel like most people, the widest amount of audiences gonna get that.
Why would somebody look at one of these trusts or one of these strategies versus let’s say the 10 31 exchange or something else like that? Like, or, how would they, I should say. I love that question. Let’s this actual, actual deal story for clients that actually use this for this exact purpose.
And next was in San Diego for suit here. And he, they’re both, both clients of mine and they built a car wash in Chula Vista. Used to be an old taco stand. And then they bought the two lots next door from each other and about two acres and they built. This cool car wash where they had the taco stand or taco restaurant inside of the car wash.
And they were facing this exact point like, Hey Brett, we built it for 4 million, basically all in with the land costs and the build. Mm-hmm. It’s now worth 13 point half million. we’re in tax reform, we’re gonna hit with huge tax. And they go, look, we don’t want a 10 31 exchange because guess what?
We, we have to buy something, something for $13 million or greater. And we have, you know, a couple million dollars of debt we have to take on this debt. And number three, we think it’s, the high part of the marketplace. And he goes, so the 10 31 exchange is the opposite of what we wanna do. We, we just made this huge gains.
We just made this great decision to build. All of these things. Take the risk, and we don’t want to, you know, put all 13 million plus replace the debt, which is the big killer for people right now who are hurting in commercial real estate. They took on too much debt and then the debt has reset. It’s a whole nother conversation here.
Mm-hmm. But the point is, we, looked at it and we said, here, I’m like, exactly right guys, we don’t need to take on all this. You don’t have to do this. You get, actually, you can get outta debt. We’re the opposite of that. You don’t have to do any debt replacement. Oh. We don’t have to buy anything for 13 million.
Oh, okay. And you can, we can build a trust with an installment sale that allows you to have flexibility for timing of investment. Because like we knew from the oh eight crash, it took about three years for the bottom of the real estate market, which we’re kind of seeing it all over again. Mm-hmm. Right. If you, if you, you know, like it’s taken about three, maybe it’s gonna take about four years from the bottom of the commercial real estate market and from, from the peak.
And so, that’s exactly what we executed. And so we sold, paid off all their debt diversified. And this is the key. We put it into a lot of it, real estate debt, actually. Passive real estate debt funds. And that’s the beauty of our strategy. We don’t have to do like kind, real estate, although we put it into something that’s kind of like real estate.
It’s debt into real estate. We also put it into bitcoin. We bought Bitcoin at a very low price, 40,000 a coin. Incredible, right? I think we’re over 120,000 this week. we put it into some stocks. We dollar cost averaged. But mainly we waited and we put it into some hotel deals that went south and we bought those out.
Some of a discount and passive, passive real estate deals. We diversified is really what we’re talking about here. But fast forward now, the marketplace is starting to actually, you know, soften quite a bit. And there’s opportunities we can use the trust, we can partner with the trust tax deferred to buy back into these deals.
And that, and the game changer. Like you’re, you’re not, just saying, oh, I’m gonna be completely passive. Like I’m no longer an entrepreneur. No, no. They can be an entrepreneur again, but they can do it on their terms. Right? If their timing, they just have to work with. team like us to help structure it and execute it kinda like a self-directed ira Adam and I imagine some listeners know about that.
You know, you have a traditional ira, but you can do a self-directed ira. This is kinda like a self-directed trust. It’s kinda like a self-directed 10 31 with no timing restrictions. Mm. And so I wanna juxtapose like that versus the traditional route. You were able to diversify, you were able to not purchase just because of timing and, just basically the rules that you have to purchase within a certain amount of time, even though you may be, didn’t have the perfect property or have the right thing you want, and you are able to really make investment decisions the way you would’ve if it went and still get the tax benefits.
am I awesome in any of that? Precisely. Literally. Nailed it. Nailed it. Yeah. So and then whenever I have this conversation, because this has been around, this isn’t like a new strategy, it just speak. If you we’re listening to this, and this is like if you’re like, well, what are these guys talking about?
First off, we, you just heard he is been doing this for already going on 20 years. So, so this isn’t like a new strategy, you know what I mean? But why do you feel more people don’t, take this route or haven’t heard of it? Like, I’m always confused about that. Absolutely. And great question.
There’s really three of the biggest myths when it comes to this, and I had to overcome these two. And I, when I was sitting at Marcus and Millichap, you know, we were known as maybe some of the best in the commercial real estate industry with 10 31 exchanges, number one brokerage firm for commercial real estate in the country for transactions.
Mm-hmm. And I’m sitting in Sacramento and I’m, learning about this for the first time. And it was like 30 of us sitting around, you know, in this conference room. And I think I would say 28 of the guys said, this is too good to be true. I’m just gonna stick with my 10 31 exchange. And but I said, guys, this is true, like this, this is the Netflix of the Blockbuster.
And so, so what are some of the, you know, well, let’s, I’m, I’m just curious enough and I’m gonna be, you know, tenacious enough to actually see what’s behind the curtain, if you will. Right? So the three biggest myths. Number one, it’s too good to be true. My CPA would’ve known about it, or I would’ve known about it.
Why isn’t everybody doing it? Why, why isn’t my commercial broker telling me about it? All the things like, you know, like these, everyone should be doing it. Like it, seems like it’s just, if it’s this good, if it’s Netflix, right? and what they don’t know is there’s a 28 year track record, right?
Mm-hmm. There’s thousands of transactions. There’s billions and billions and billions of assets sold using it. And key here, over 30 node change audits from the attorney who’s my business partner that I work with, and he’s the creator of this. And so compare that to the 10 31 exchange. 5,000 QI companies across the us they’re all banging the drum of, of 10 31 exchange.
Okay? Mm-hmm. By the way, there’s people who still know about a 10 31 exchange after, you know, 30 years of banging the drum. Right. You’d be shocked, right? Or they don’t really underst the nuance. Oh, no. For sure. There is is no, there is, there is. Yeah. I agree with that. Yeah. Yeah. And, so those, that’s number one.
So the legal part, so once we get through the legal part that it’s legal, it works. It’s never had a failure in any of the audits. Some people get confused with another strategy that has had failure. It’s called the monetized installment sale, which is a, which is a kind of a train wreck. That’s, we steered clear of that and there’s reasons for that.
But they kind of couple ’em together. There’s. Parts of the commercial real estate community. And by the way, I’m a part of that. I’m a California real estate broker by trade, sold over half billion dollars in real estate. Like I love 10 31 exchanges when they work out well for people.
But the point is, those that don’t want you to know about this, Adam, they want to keep you in the 10 31 because that’s all they know. And, or that’s just, you know, the one, they have a hammer and they have a nail, and that’s all they see every single time. But it doesn’t serve the baby boomer population, especially who are exiting over a hundred trillion dollars in the next five to 15 years or not exiting and getting crushed with tax.
And it’s, you know, 10,000 baby boomers during 65 every single day and about, about 80 million in the US alone. So all of these things are converging and they’re having to really take a look at this for maybe the first time, or take a serious look at it. That’s number one. Number two, there’s a trustee.
Okay? I’m a third party unrelated trustee. You have to give up some controls, okay? And this is important. selling it to a trust in exchange for a problem. just like you, if you send your funds to a QI company, you’re giving up some. Controls, you have to give up some controls here. And so that means I have to approve of the investment decisions.
But so do you as the note holder, if it’s your deal, Adam, right? Mm-hmm. we have to fall within the parameters of basically this, trust. It’s gonna pay you back. You will pay taxes, you receive payments back. This is not avoidance. It’s deferral, okay? But these trusts can go on for as long as you want.
They can pass to your kids and you can, most, most clients just like to live off the cash flow of it and just keep the principal intact. And so that’s number two. You have to give up some controls and work with the trust. There’s ongoing fees is the number three one. It’s about one point a half to 2% on the trust of value.
That’s in the trust. And there’s about 1.5% on the, on one time setup fee for the tax attorney. So the fees aren’t inexpensive. A QI company for 10 31 exchange, it’s 1500 bucks, probably right around there. And it’s very inexpensive. I call that a commodity, right? And again, if you have a 10 31.
Go for it. We’ll be, we’ll be your first biggest fan if you find the deal. We can also save a failed 10 31 exchange. So we don’t, we don’t say don’t do it 10 31. We say, Hey, go for it. 10 31. If it works and it works great, you you don’t pay us anything. If it doesn’t work, hey you’ll be we can save that failed 10 31 or sometimes like our client Craig, he had a, buy fracture, 10 31 a half, 10 31 and a half deferred sales trust, and he sold a $6 million piece of land in Texas.
And so. He found a perfect $3 million deal, you know, actually two in two different states. And then the other boot that was left over, he was able to put it at the trust. And so it’s not a one size fits all. And, that’s those are some of the three biggest myths that people have to overcome.
And then once they overcome it, it’s like. Oh my gosh, why would I ever do a 10 31? And you go, exactly, exactly. You probably, you probably wouldn’t, especially if you’re looking for truly passive income or, you know, you’re looking for timing on your side you’re looking for some diversification, some liquidity.
So yeah, those are the biggest reasons and this is why we’re here and we, we’ve dedicated our calling to, really helping people understand this and execute on it. It’s amazing. I love it. And I need you to keep on doing that, by the way, Brett, because more people need to hear this. So go keep going on shows, keep going on more shows, keep doing what you do because when next time somebody goes into, whether it’s.
10 31 or whatever, the option they choose, at least I like them to at least know that this was an option, right? Like to know, to make a qualified choice of what was gonna work well for them and not just go with the status quo. ’cause that’s the way they’ve always done it. Or maybe they thought using your words or, is this too good to be true?
Like, is this real? It’s real. It’s decades of precedent in doing this. So Brett, it has been amazing you having you on this show today. How do people follow up and keep and review their personal situation with you and or your team and connect and see if this is something that’s right for them?
Yeah, really two places. You can go to capital gains tax solutions.com right now if you have a qualifying transaction, which again is Bitcoin business, real estate or really any asset stock, public or private stock, and it has at least a million dollar gain, Adam and a million dollar net proceeds. So it needs to be larger transactions, million dollar gain, million dollar net proceeds, or large enough transaction to qualify.
Now, if you said, Brad, I got one of 900,000 and I got another one. 500,000. Can I combine the two? Of course, right? You can combine, you know, two to get to one. We don’t want to combine, five, or really even three, or even three or four to get to, to get to a million. But we wanna, we want to, you know, look at that.
It’s a key factor there. So that’s number one. Number two, if you wanna you know, get my book to learn about my entire story it’s called Building a Capital Gains Tax Exit Plan. We have Kevin Harrington from Shark Tank. In the book we have Tony Robbins, CPA in the book and a number of other. Really, really sharp and sophisticated commercial real estate and financial professionals.
And it’s a book that really tells my story of this and also walks through a lot of these, the bigger myths and help people overcome those things. You can pick that up on Amazon, that’s building a capital gains tax solutions building a capital gains tax solutions exit plan. And the last place is brett schwartz.com.
If you wanna follow me on all my social media and check out the best 10 31 exit plan as well. Wonderful. And Brett we’re gonna put those links in the show notes so that people can go in and check out your content and check out your site of course. And for everybody listening, just so you know, again, those links will be in, in the show notes, so you can check it out or, if you’re looking at watching this in the blog then it’ll be there as well.
And speaking of the audience, if this is your first time with Mission Matters and you haven’t done it yet. Hit that subscribe or follow button. This is a daily show. Each and every day we’re bringing you new content, new ideas, and hopefully new inspiration to help you along the way in your journey as well.
So again, hit that subscribe or follow button. And Brett, leave that website one more time. I want people that were driving, they’re busy. They’re, fumbling around. What’s that website? One one last time? We’ll end it on that. Yes. Capital gains tax solutions.com. Capital gains tax solutions.com.
Thanks, Heather.
