Tax-Deferred Investment Quiz
Take Our Quiz To See if Traditional DSTs, 721 DSTs, Qualified Opportunity Zone Funds, or Structured Installment Sales Make the Most Sense For Your Situation.
What are Tax-Deferred Investments?
Many investors are already familiar with 401(k)s / 403(b)s and other employer-sponsored retirement plans. Many investors have probably heard of Traditional / Roth IRAs as well. Health Savings Accounts and 529 Plans are also top-of-mind examples of tax-deferred investments. The most used tax deferral is rolling over an old 401(k) into an IRA and deferring the taxes.
What about real estate? In our world, we consider real estate to be an investment that is tax-deferred because a) you can choose when to sell it and b) you can do a 1031 exchange, or “real estate rollover.” Tax-deferred investments are precisely that, investments that allow you to defer taxes. Whether you’re rolling over an old 401(k) or doing a 1031 exchange, you’re deferring your taxes.
What about some of the less-common tax-deferred investment options and strategies?
- Delaware Statutory Trusts – defer gains on the sale of real estate.
- 721 UPREIT DSTs – also defer gains on the sale of real estate.
- Structured Installment Sales / Deferred Sales Trusts – defer gains on selling businesses and real estate.
- Qualified Opportunity Zone Funds – defer gains on almost anything.
- Section 1031 Exchange is the mechanism that lets you defer taxes on like-kind exchanges.
- Section 721 Exchange allows investors to sell properties directly to REITs and defer taxes on selling that property.
- Section 453 allows investors to defer gains on selling their business and/or real estate and pay taxes later.
- Opportunity Zones Funds were created by the Tax Cut & Jobs Act of 2017 to defer taxes on the sale of any gain by investing in Opportunity Zones.
How do these investments fit into an investor’s portfolio, exit plan, and estate plan? Please take our short quiz and see which tax-deferred investment plan may be right for you.