Defer Capital Gains Taxes on Real Estate with 1031 Exchange

Whenever you sell a business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. Internal Revenue Code Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in a similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred.

Give Appreciated Assets to Charity

Smart taxpayers do not give cash to charity if they have appreciated stocks or securities they could give instead. You can give an appreciated asset to charity and not have to pay any tax on the appreciation. You still get to deduct the full fair-market value of the assets given to charity. For example, let’s say you bought 1,000 shares of stock for $10 a share—a total cost of $10,000. The stock then appreciated to $20 a share. If you sold the stock at $20, you would have a capital gains tax on the $10,000 appreciation of the stock. If you were to give the 1,000 shares to charity, you would not have to pay capital gains tax on the $10,000 appreciation, and you can deduct the full value of the stock ($20,000) as a charitable donation.

Eliminate Capital Gains Taxes with a Charitable Remainder Trust (CRT)

The charitable remainder trust (CRT) strategy will not work for everyone, but, when appropriate, it can be a very powerful tool. If you have a highly appreciated asset (such as real estate, stocks, or business) that you do not want to pay capital gains tax on, you first transfer the asset to the CRT. Then you have the CRT sell the asset. The CRT is recognized by the IRS as a charitable organization, so the CRT is not required to pay capital gains tax on the sale of the asset. You will receive a charitable tax deduction for your contribution of the asset to the CRT, which will reduce your income taxes. Now, you can receive income from the CRT each month for the rest of your life. The CRT is a charity, so the assets remaining in the CRT are designated to go to a charity upon your death. Or if you are married, the assets go to the charity upon the death of you and your spouse. If you wish to still have the assets go to your family to manage upon your death, you can set up a Family Foundation and designate this family charity as the beneficiary of your CRT.


The American Society for Asset Protection has helped thousands of clients reduce their capital gains by utilizing various strategies and legal entities. The American Society for Asset Protection works with clients in all fifty states.