Options to defer taxes without a 1031

[Alicia Marks]

I am looking at a house package, but the seller is not planning to 1031. I would like to offer options to defer tax because he's retiring in about 2 years, but getting out from under his loan is his priority to be more liquid. What options do I have to offer? I considered getting a first for his balance and owner finance an installment loan as a second. I was also considering having him do a loan for the downpayment and we go with a portfolio loan. It didn't sound like he wanted to owner-finance the full amount. I would like to put in as little money as possible, as the rentals are M2M and will need about 10K in spruce up to rent at market value. That part I'd likely cashflow. Open to any suggestions or pitfalls to these strategies I may be missing.

[Andrea Gehrett]

Hi, just a thought…

The seller could consider first selling the property to an irrevocable trust where he is the discretionary trustee, the trust then sells the property to you, and then he/trustee can elect to defer any capital gains, perpetually, and draw the funds down at his discretion against the Demand Note (liability due to him from “selling” property into the trust…which had no cash at inception). Tax free. Trusts are subject to contract law, not legislative law. I’m not an attorney but my agency creates strategies to help solve issues just like this.  Hope this helps!