Maximize Your Returns: Brett Swart’s on Real Estate Tax Solutions

Erika (01:31)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and I’m thrilled to be here today with a guest who’s shaking things up in the world of real estate and tax strategy. Please welcome Brett Swarts, the founder of Capital Gains Tax Solutions.

Brett Swarts (01:48)
Erika, what’s going on? to be here.

Erika (01:52)
I know you got some noise going on there, it’s okay. I’m really excited for our listeners to hear about your innovative approach and how you’re helping investors keep more of their hard earned wealth. So let’s jump on in.

Brett Swarts (02:07)
Yeah, so we exist to unlock capital gains to multiply freedom and impact. Most folks find us and the problem they’re trying to solve is they have a massive capital gains tax. I somewhere like a million dollar plus gain and a million proceeds and they’re selling a business, Bitcoin, real estate, stock, and they’re looking for a way to defer that tax and compound their wealth. Most people know about a 1031 exchange. We like to say we eliminate the need for the 1031 exchange.

And so yeah, you’re gonna wanna listen to this episode if you have a big exit coming up and or you have clients that you serve that sell five, 10, 20, $100 million businesses or real estate or Bitcoin. And you’re saying, is there a way to defer that tax and invest it into real estate syndications, real estate funds, or back into other real estate deals and developments or anything else really you can invest into that’s really actually flexible versus the old 1031 exchange that can be very, very inflexible.

Erika (03:02)
So I was looking at your website before we ⁓ hopped on the show together. And I wanted to ask you, what’s been key to making a deferred sales trust such a powerful tool for your clients?

Brett Swarts (03:16)
Yeah, it unlocks what matters most to them. And if you ask most real estate entrepreneurs and investors, or even business owners that are selling, what matters most is typically what I like to, what we call truly passive income. You know, we’ve all read the Rich Dad Poor Dad book, right? And we want to get to that fourth side of the quadrant. But the reality is we start building our wealth and our real estate and all these stuff, and it ends up just pulling us more and more of our time, our energy, blood, sweat, and tears.

And it’s very difficult to get to the point where your money is actually working for you and you have what’s called truly passive income. And so we define truly passive income as no shoes, no shirt, no problem. You’re Kenny Chesney on the beach. You’re playing your guitar. You’ve got that drink in your hand or maybe it’s sitting next to your guitar. You got your hat on and you’re literally don’t have to think about the consistent, durable, passive income that’s flowing in 10, 20, 30, 40, 50,000 a month.

that you can count on, that you don’t have to trade any of, not just your time, but even your energy or your stress, right? And so too often I think we get trapped in the thought of, I wanna be a real estate pro, own all this real estate, build it all up, and then you get caught and you start looking around and going, wow, have I made it? mean, a lot of people have made it that’s great. And then now what? Well, I think I have to buy more, more property management, more team members.

And that can be a part of the path, but at a certain point people say, I want to get out of that because I want to achieve truly passive income. And so we build plans for real estate pros or business entrepreneurs who are exiting, know, again, a one, five, 10, 100 million dollar exit and then build a team to be able to unlock truly passive income with what we call a deferred sales trust that really transforms families. It transforms families to make a bigger impact.

So that’s in essence what we do, who we are, and what we focus on.

Erika (05:59)
That’s really exciting and I would like to dive into that a little bit more. Can you share a time where you helped a client like turn around a situation with a tax deferral strategy?

Brett Swarts (06:09)
Yeah, we’ll do a $13 million sale in San Diego. It’s a car wash. And imagine an old taco stand sitting on about a two acre lot. the taco, if you’ve ever been to San Diego, it’s like the best burritos you ever have. It’s amazing. And this taco stand, they saw this piece of dirt and they said, hey, we will buy this land from this taco stand owner, but we’ll put that restaurant inside of this car wash. And so that was the plan. They built a $4 million car wash. Well, within a year and a half, the value went from $4 million to $13.5 million.

Well, in tax affordability, that’s a big tax bill, right? And second, they’re in the development business. So they’re not in the business of buying properties for 13 million, they’re in the business of buying land for 500,000, developing it for three and a half million, and then selling it for a massive gain. Well, you see they’re faced with this huge capital gains tax. Second thing is the marketplace is really shifting at that point. We felt it was the top of the market. This is before interest rates increased and basically doubled.

And so we knew everything was pretty well priced at a high point. So not only did we sell, we got them out of debt. They paid off all of their debt. They diversified their wealth. then they sat in mostly in hard money lending, making 10 % plus on the trust funds. And this trust owes them the money and they diversified their wealth. They bought some Bitcoin at 40,000 a coin, which is over 100,000 a coin now. And that’s really the power of this.

They no longer were faced with the management of the property. They got out at a great time. I mean, they did what our parents taught us to do, Erika. They sold high, right? And they paid for it at a decent basis, but they also didn’t have to suffer the consequences in the year, say, of the massive capital gains tax. And so that’s essentially what we’ve done. And then we’ve been able to dollar cost average into some foreclosed opportunities, into some stocks, ⁓ into some other real estate syndications, into some debt that’s paying 16%. And that’s the beauty. We basically have harvested.

defer the tax and compound their wealth. And then fast forward, they’re looking for land to buy now and they’re looking for land values to drop. Real estate can take a couple of years to really shift. And I think we’re seeing it really here in 2025, values and sellers coming to a point where they say, you know what, I can’t long or wait, I gotta be foreclosed on or I’ve got to discount the price. And now that’s where we’re gonna be buying opportunities now, but we can do that tax deferred within our strategy.

And that’s the part where people’s brains explode. go, how do you sell high and buy low and not have to go to different things? Isn’t the 1031, you can’t do that? Right, we don’t do a 1031. A 1031 is blockbuster and we have the Netflix version of exit planning and investing for real estate pros.

Erika (08:49)
That’s great. I love it. You’ve clearly got a wealth of knowledge. that’s also why I wanted you were talking a little bit about Bitcoin and crypto. Can you talk about that more with how to deal with unique assets with investors?

Brett Swarts (09:03)
Yeah.

So first of all, ours, our, our strategy, the Deferred Sales Trust works for Bitcoin exits, business, stock, real estate, primary homes, luxury, anything real that you’re selling. We can also save a failing 1031 exchange in case you’re going for that. So, the simple thing is you have a basis when you buy something and you have a gain when you sell it, if it goes up, right? And the difference is the gain is taxable, right? And depending on what state you’re in, it’s taxable.

it’s 20, 30, 40 % of your proceeds is gonna be hit with tax depending on depreciation recapture. So the first thing is understanding what that means and what that is. So in essence, what we’re doing is we’re saying instead of selling that and just paying tax, we had a Bitcoin owner, I’ll give you a live deal, she worked for Google, and she had about 54 million of Bitcoin that she bought for about 50,000. So she had basically a $54 million gain, okay?

So we exited five of that 54 million when Bitcoin was at 54,000 a coin and we were able to defer that tax and she was able to invest into a business, all tax deferred and it was like kind of the seed capital. And the way we do that is through an installment sale method. So we set up a trust, the trust buys the Bitcoin for five million and immediately issues a promissory note to the seller. And then the trust sells it for five million. And here’s the key, Erika, if the trust bought it for five million and sold it for five million,

guess what, there’s zero gain on the Bitcoin sale at the trust level. So the trust has zero tax and at the seller’s situation, they’re in a deferral state until they receive payments back. I think we wrote the interest rate around 8 % or so on that interest rate. And so in that 5 million until they take any payment, do they pay any tax? And so we start making payments, but we’re investing the funds to get cashflow and different appreciation. And that’s basically the game. It’s a seller carry back with a trust.

And so now she can go into business ventures, stock market, real estate. She can diversify that Bitcoin sale. Now, fast forward, the Bitcoin went to 68,000 a coin, then it dropped to 15,000 a coin for the rest of her Bitcoin. And now we’re over, I think, over 105, 108,000 a coin. So now she’s worth over $100 million. Isn’t that pretty cool? And we’re looking at another exit coming up here, right? Because you can exit at different times in different tranches.

Erika (12:02)
Yeah, wow. That can potentially be a very stressful situation, and you’re making it almost stress-free. I mean, that’s incredible. What piece of advice would you give to a real estate investor who’s feeling overwhelmed by all of this and has to manage properties, and they want to grow their wealth tax efficiently?

Brett Swarts (12:23)
Yeah, I always like going back to stories of another client, Warren and Catherine in Sacramento, who had that exact situation. They had 15 unit apartment complex. And actually the property was fully occupied. They actually loved the tenants. But the challenge was they had twin daughters a little bit later in life. And they found themselves thinking, we’re now making trades. We’re trading the toilets, trash, termites, and tenants for our twin daughters in the sense of they were spending more time or a lot of time.

too much time at the property and the season of life had changed. And so we looked at their numbers, it was a $2.5 million estimated value. They were gonna pay about a million in tax if they did a 1031, or if they didn’t do a 1031 or a deferred sales trust. And they said, we have 15 units, we don’t need 30 units. We have the millions of dollars. Their NOI was about 120,000.

And so, and then we said, well, we can go to 160. So what I’m walking you through right now is what’s called a, what I would do is a return on equity analysis, but I would also do an ROT analysis and an ROI analysis. Now, most people when they hear ROI, they think return on investment, but really I want an ROI, the better ROI is a return on impact. And what kind of impact can they make for their kids if they spend more time with their kids? And what kind of impact could they make if they got truly passive income?

And the ROT also is return on time. You see Warren was spending his weekends driving back and forth to fix something or do something with the property. was always something pulling me away. Then you have the California fires and then you add in property insurance triples. And then you add in rent control with California. And you start to add up these things and say, do I really want to be a landlord in California? Do I really want to be a landlord when I have 2.5 million of equity only earning about 120,000 NOI?

Do I really want to be a landlord if I’m not spending as much time with my daughters as that I want to be? Right? And so when you get really clear on those things, Erika, it’s really easy, right? Then he said, well, what solution can you get me to the other side? And that’s where the Deferred Sales Trust comes in. So we built a capital gains tax exit plan. We weighed his options, pros and cons on each side. And then it became crystal clear that, wow, I can increase my cash on cash by 60%. I can increase my time and my energy with my kids. I can get asset protection.

I can get out of debt. I don’t have to 1031 ever again. But it doesn’t stop him from becoming a real estate entrepreneur. And again, if they want to be, this is the cool part. See, we sold also at the peak and put it mostly into real estate debt. And we got a record price for the property. And the market has shifted drastically since that point. And we’ve been investing into passive real estate multifamily deals at a discount, passive debt and investments. And it’s changed their life. And so Warren and Catherine, we just spent with a family conference last week.

with our families together, with their daughters, meeting my daughters, and they’re going, wow, what an amazing transformation for our family. We thought it wasn’t possible. We thought we had to just drop into, swap into your drop and get a stepped up basis. And they go, now we can do so much more. So those are the type of advice that I would say to folks is really get clear on what matters most to you. And if you can achieve truly passive income today,

What’s stopping you from calling us, setting up a plan and building it out and executing it?

Erika (16:26)
That’s great. These are some wild stories that you’re sharing. I love the success that you’re helping people achieve.

Brett Swarts (16:35)
Thank you. It’s our pleasure, yeah.

Erika (16:38)
So looking ahead, what’s the next big goal for capital gains tax solutions? Are you focused on scaling your reach, introducing new strategies, or maybe something else?

Brett Swarts (16:49)
Yeah, so it’s transforming ⁓ about a thousand families lives through the building of capital gains tax exit plans to multiply more freedom and impact. And freedom and impact is not just, your truly passive income number, although that’s the first step in the process. It’s really like, how do we, how do we, how do we instill mission vision values with our family, with our wealth and a way that we could pass it to our kids and our grandkids that helps to leave something not just for them or to them, but something in them.

meaning mission vision values with the wealth, with the impact to help MVPs, the most vulnerable people in this world. And so it’s a calling for us. There’s about 84 to 100 trillion that’s transferred from the baby boomers in the next 15 years. This is the largest well transfer in the history of the planet. So it’s an amazing opportunity, responsibility, and especially what you’ve seen recently with the Doge findings that the government is not only wasteful with spending, but a lot of it’s a lot of waste, fraud and abuse.

And so we want to keep it in the hands of the people to create the jobs, to build the real estate, to end the housing crisis, right? To help those that need it the most. And so we believe in the spirit of the entrepreneur, the real estate professional, the developer. And so the challenge is capital is locked. And so we want to unlock the capital through our Deferred Sales Trust to fund developments, right? And then to fund massive cashflow increases.

so that the excess can be given to help the most vulnerable people. So it’s really a simple equation, help a thousand families achieve this, build world-class teams along the way that we strategically align with and execute on a strategy that gives them the maximum flexibility. No charity life insurance or gifting is required, although we can, you we certainly want to be able to have them a chance to give. And when you combine all of that together,

⁓ It ⁓ sounds a little daunting at first, but once you set it up and you get it running, it runs like a weld oil machine, but it does take some steps to set up. You got to set it up prior to the closing. You got to get the attorneys, the CPAs, you got to educate them, the brokers. I’m a California real estate broker by trade. We have a tax attorney CPA that’s a business partner that helps to set these up. It’s a team effort, but this is why I love it. I played basketball growing up in college. I played football in high school.

We’re very, like the team is really important for these kind of big, big changes for families.

Erika (19:13)
Yeah, and with what you’re doing, like I could just tell how much you value those relationships. And you know, we really value those relationships too on the podcast. And that’s the perfect time for me to ask you, with your experience, what’s been the most effective way for you to build relationships with strategic partners?

Brett Swarts (19:37)
So I think the number one way is through client transformational stories, right? So the stories I’ve told you about just a couple there, you know, we have another $11 million exit for Nick and Jeannie, changed their life and their family’s life and their legacy. The Bitcoin story I told you there. ⁓ Massachusetts, we just sold another $8 million property, helped the client exit $8 million ⁓ automotive industry property. So.

they naturally send referrals, right? They connect us with their professionals, their professionals want to know what we do, how we do it. And we strategically align with CPAs, tax professionals, financial advisors, real estate professionals, and the advisors. So that’s been the probably the top way. just the transformational story. And then they share their, their, professional relationships. I think number, number two would be the YouTube channel on the podcast, right? Going on shows to share things like this.

to get the content and the educational value out there for people to be able to rewind, watch, slow down, take the notes on it. The next thing would be speaking on stages. I’ll speak at different conferences like the Best of Real Estate Conference or DLP Capital Conference. We wrote our book, it’s called Building a Capital Against Exit Plan. So people can check that out with Kevin Harrington from Shark Tank, which is pretty cool. He’s in the book and a hit bestseller for Amazon.

So we have Tony Robbins, CPA, one of the CPAs is ⁓ Tyler McBroom in the book. So those are other ways to help, think, you know, trying to get in front of other audiences through ⁓ their list. Those are just a few. We have the blog, we have, you know, we have the social media stuff.

Erika (21:16)
Yeah, yeah, those are all great, great things. You’ve really cast a wide net there. If someone wants to connect with you and maybe they’re looking for your help, what’s the best way for them to reach out?

Brett Swarts (21:29)
So go to CapitalGainsTaxSolutions.com and you can schedule a no cost consultation if you have a million dollar net proceeds, million dollar gain exit coming up. We need to set it up prior to the close of escrow. We also have the best 1031 exit plan if you wanna go for the 1031, we can save that 1031. Same criteria, but you can go to CapitalGainsTaxSolutions.com to get started on that. And I would also say that if you wanna follow me on social media, bretswartz.com, we have all of our social media and all of the stuff there. Those are the main two places.

Erika (22:00)
Awesome. But thank you so much for sharing all your expertise and insights today.

Brett Swarts (22:05)
It’s been my pleasure. Thanks, Eric, for having me.

Erika (22:07)
You’re really passionate about helping investors and I know people are going to take away a lot from this. It’s going to help people with financial freedom and reaching their goals. Yeah, just really excited about everything you’ve shared today. For everyone tuning in, if you found this episode valuable, make sure that you are subscribed to the Real Estate Pro Show. We’ve got more conversations with top players like Brett Swarts coming your way.

Until then, keep building your wealth and we’ll see you on the next episode. Bye.