Capital Gains Tax Solutions Podcast · Brett Swarts

The 1031 Exit Trap: How to Replace Debt and Defer Taxes Like the Top 1%

·23 min·2 clips

Dan reveals why a $3 million debt on a zero-basis property triggers ordinary income tax if not replaced.

This episode explores how to handle capital gains tax when selling highly appreciated assets with debt exceeding basis, comparing Delaware Statutory Trusts (DSTs) and deferred sales trusts. The hosts explain that debt over basis is taxed as ordinary income and demonstrate a bifractured 1031 exchange using a zero-coupon DST to replace debt, allowing the remainder to go into a deferred sales trust for flexibility and cash flow.

As heard by us

A practical look at capital-gains exit planning for appreciated assets.

This episode keeps its focus on capital-gains exit planning, comparing a Delaware statutory trust, a regular 1031 exchange, and a deferred sales trust while staying anchored in sale price, adjusted basis, and debt.

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Why you'd press play

If your exit has debt, this shows where 1031s stop and trust planning starts.

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