Transcription of Episode

Intro/Outro 0:04
Welcome to Investing Across Borders with Lauren Cohen. Every week she will share valuable information that you need to know in order to successfully invest in real estate and other business endeavors in North America. We believe in helping clients invest, live, work, and play across borders. And now, your host, Lauren Cohen.

Lauren Cohen 0:27
Good afternoon, everybody. This is Lauren Cohen, international legal and real estate expert, and the host of investing across borders, a podcast where we teach you our listeners how to invest live, work, and play across borders, because at the end of the day, we all want to play right. So our goal today is to teach you some really cool stuff about capital gains, exemptions, savings and opportunities with my guests, Brett Swarts. And also I wanted to mention the fact that we are a sponsored podcast now, which is super exciting. We are sponsored by Lendai, a company that lends born investor dollars to Canadians, Brits. Australians and Israelis investing in non owner occupied US real estate. So it’s a pleasure to have Lendai as my partner I love working with them. And it’s a quick and easy process to figure out if you qualify to buy that non owner occupied investment property in the US how amazing right? Anyway, I’m sure Brett, you’ve heard a lot of challenges about that having worked with foreign investors over time. And so what I’d love to do is just have you briefly introduce yourself and share a bit about about you. And also after that we’ll talk about how we met.

Brett Swarts 1:44
Excellent. Thanks a lot for having me. Yeah, Brett Swarts here, founder of capital gains tax solutions, located in Northern California. And so I’m married. I’ve got five kids and wife primary for 12 years and kids from three to 11. And we really focus on helping high net worth individuals defer capital gains tax on the sale of highly appreciated assets, including cryptocurrency, commercial real estate, businesses, primary homes, whether you’re a citizen of the US or not, it works for anything that’s subject to highly appreciated us capital gains tax assets. And so that’s a little bit about me.

Lauren Cohen 2:22
Let’s backtrack for a second. I met Brett at an eXp commercial event. It was my first live event since the pandemic started. And I actually spoke at a global summit the next day. But there were about 50 people in the room learning about eXp commercial, which is an amazing portal. As everybody knows I’m part of eXp commercial. It’s an amazing brokerage. It’s been life changing for me, it’s helped me to build my How To Immigrate Through Real Estate signature program. Brett, when did you join up with eXp? What was your history and why?

Brett Swarts 3:00
Absolutely. So before my capital gains tax solutions days, I started out as a commercial real estate broker at a company called Marcus and Millichap. We specialized in multifamily. And they do industrial office, land, senior housing, but my specialty was multifamily. This was like 2006, so this is right, when everything was going really well. And then everything wasn’t going so well. Right? The calm before the storm. And so that’s where my journey began with capital gains tax deferral, 1031, exchanges, investment, real estate. And then fast forward. I’m still a California real estate broker. I still do multifamily here in Sacramento. But then we also train and coach agents on how to win more listings using the deferred sales trust, which we’ll talk about here in a minute. But that led me to eXp commercial. A friend of mine called me about a year and a half ago and said, Hey, commercials on the way. I had heard about eXp five years prior and I dismissed it because it wasn’t commercial. Right? And I had my blinders on. Honestly, I just didn’t have enough bandwidth. I was so focused on capital gains, tax solutions, and commercial real estate that I just dismissed it. I didn’t underwrite the model. I didn’t look at it right. But then my buddy called me and says commercials on the way. It’s not here yet, but it’s coming. So I joined about six months prior to commercial actually launching. And so when it actually launched and I found out that Jim Wong, President of eXp commercial, former Marcus and Millichap agent, BRC advisors, I literally called him within an hour of the announcement. And I flew down the next day to Irvine, to meet with them face to face to say, Hey, Jim, I’ve been waiting for you to come here and open this up. Let’s go. And so that’s been the journey and it’s been an amazing opportunity to network and learn and grow with other real estate entrepreneurs, and practitioners, and I absolutely love eXp Commercial. So that’s the journey, Lauren.

Lauren Cohen 5:02
Awesome. Well, the journey with five children is very interesting to me too. How did that all go during the pandemic? You said that they’re from three to 11?

Brett Swarts 5:14
Exactly three to 11

Lauren Cohen 5:15
And the 11 year old was probably the worst, right?

Brett Swarts 5:18
You know, she’s pretty amazing.

Lauren Cohen 5:20
Oh it’s a girl, that changes that. It’s different, mine’s a boy turning 11 in two weeks, and I think girls are much more adjustable and get through things more easily at that age.

Brett Swarts 5:34
For sure. Right. And we’re in California. So we’ve got a bit of, let’s say there’s lots of places to go. Tahoe, Santa Cruz, the mountains. And so it depends where you’re at. So we did find, you know, they’re very adaptable. She’s very independent. She’s very creative. She dug more into her artistic side of things, drawings, and things.

Lauren Cohen 5:56
I’m jealous. And the little ones, they were okay, too?

Brett Swarts 6:02
Yeah, the little ones. So I have 3, 5, 8, and 9. And so same thing, you know, we do outside soccer, we do a lot of activities outside. So that was really good. We did just fine where we were at.

Lauren Cohen 6:17
Cool. Yeah, it was definitely a challenge for me. But I also only have one. And I think it makes a big difference because he was alone.

Brett Swarts 6:24
That’s a good point. Because they have each other to play with all the time and play.

Lauren Cohen 6:29
At least it’s interaction. And I think that was the hardest piece for us was a lack of interaction, a lack of social interaction. And now I’m sure as we discussed before, we started to have a little bit of social anxiety, having been through COVID, about two months ago. So but you know, I think the whole world has a bit of social anxiety in some way or other. But look, I wanted to ask you so my understanding, and obviously this is different than the DST, you’re talking about. To me. The DST is the Delaware statutory Trust, which is what the 1031 kind of the I guess you would call it the fund that is used rather than going from one property directly into another, you can invest in this Delaware statutory trust and not have to choose a property. You mentioned, deferred saels trust. Tell me about that. How in the world, does it have the same acronym?

Brett Swarts 7:21
I know what are the odds, right.

Lauren Cohen 7:22
That’s really weird. That’s confusing.

Brett Swarts 7:25
It is totally confusing. And I’m going to try to make it really simple for you right now. So you remember blockbuster, right?

Lauren Cohen 7:32
Oh, yeah. We talk about it all the time, don’t we?

Brett Swarts 7:31
Yeah. So you remember going on a Friday night, Lauren, and you’re excited to get that movie, and it’s behind that cardboard box and a cardboard box is pressed out. You’re walking down that aisle, and you’re bout to grab that movie, but right before you do someone grabs it and smiles at you. You’re like, Oh, they got that before me. But you get your second movie, and then you have to return within three days. So that’s what the 1031 exchange is. Honestly. That’s what they’re used to is blockbuster. Okay, there’s nothing wrong with blockbuster. If you can find a deal that makes sense in the 45 day window and 180 days to close, then, you know, we applaud you like and we’re excited about that. We still do 1031 exchanges. We’ve closed Delaware statutory trust, but we also have Netflix deferred sales trust, right. And by the way, a Delaware 1031 is simply it Hollywood flicks branded or not. But I like these as a simple analogy, because it can get cut tax and get a little dry, a little complex. And so the Delaware statutory trust is just a Hollywood Video. So it’s just the side movie store. It’s the second video store. It’s just 1031. Right? Which it does have its place. Every tool has its place. But the deferred sales trust is like Netflix and there’s no timing restrictions. You can sell real estate high, buy it low. You can go into stocks, bonds, mutual funds, you can go into hard money lending, you don’t have to do like kind replacement property, you can pay off all of your debt. Okay. And once you understand this, I’ll tell you a deal story right now to bring this to life. You literally probably will never go back to Blockbuster ever again. It would be challenging, especially with the very high values, very low inventory, all of a lot of money chasing the same deals, cap rates, and if compressed to three and 4% and rent that honestly have been pressed up these last couple of years. So you’re there’s not a lot of juice left and a lot of these deals. But that being said, the deferred sales trust a gentleman in 2006. And this is the one deal once you understand this. It’s what started my company what gave me the vision and the propellant to start my company go all in on this. This gentleman he’s worth a couple 100 million dollars. He’s selling a $20 million property across the street from the Minnesota Vikings stadium. And he’s looking at a huge capital gains tax and his 2016 he’s looking around for a 1031 and he can see nothing that makes any sense kind of like right now. He thought something could potentially happen. He didn’t know 2008 was going to happen like the way it did but he’s like something could happen. So he sold high at 20 million. And his point was either I’m not going to overpay, let me they’re going to pay the tax, I’m going to try this new Netflix thing out that he had never heard of before. He didn’t tend to want to change his his entire life. This guy hates the stock market loves investment, real estate. He’s made a lot of money for the first time he sold and he deferred all the tax using the deferred sales trust. And he parked it in very conservative stocks, bonds, mutual funds, investment grade securities, not subject to huge losses that the stock market had basically parked it on the sidelines, okay, kept his powder dry. Five years later, the bank calls him up and says, Hey, you know that property is sold to that 1031 buyer out of California for that really high price? He says, Yeah, because well, we just foreclosed on, and he couldn’t make the payments. And we’re just curious, do you want to buy a back from us? It seems like a logical thing you used to own the property? And he goes, Well, maybe what’s the price? And the bank says 60 cents on the dollar. Wow. He says, Yeah, that sounds like a pretty good deal. So he reallocated the funds that are in the deferred sales trust, not paying $1 in tax into an LLC. And he bought back the property at 40% less than what he sold it for and see a Lauren, our parents taught us to sell high and buy low. They didn’t teach us to sell high and buy higher, 180 days later, and properties that don’t make sense with more debt, lower cap rates, and all the stress that’s involved with it. Yeah, you see, once you figure out that we’re in the business of solving our clients problems, and not in the business of just selling a tax deferral strategy, or selling a piece of real estate, it all changes. So because the biggest promise for baby boomers right now is what’s called the largest wealth transfer in the history of the planet. You see, a lot of folks have made for 10, 20, 30 years more wealth in the history of the world has ever made before. And it’s going to transfer to the next generation as they want to get out of the toilets, trash liability, as they want to move funds outside of their taxable estate to save 40% as they want to buy real estate when it makes sense. Right? But not on the blockbuster 1031 version, right? And so once you connect these dots, it all changes. And it opens up what I like to call transformational wealth planning. Not just transactional blockbuster planning, but transformational and giving liquidity diversification. Timing, which time is the number one way to build wealth is timing on the buy in timing on the sell all tax differently. Okay, so I’ll pause there, make sure that makes sense, Lauren?

Brett Swarts 7:57
Yeah, I mean, it’s really quite interesting what you’re saying, because, you know, so many of my clients now a lot of my clients are from out of the country, investing in real estate for the first time in the US, not even knowing about 1031 Not knowing how they might be able to use 1031. And if they keep their money in the US, there are ways to potentially use 1031 if you set up the structure properly, but just making sure that you understand that you’re not there are often people scrambling, especially in this type of market to figure out what do I do with that money, because I’ve only got 45 days to choose the new property and six months to close. And then it’s a seller’s market, not a buyers market right now. And so you may go through 10 opportunities before you find one that works. And this gives you that chance to defer that those choices and still get the benefit of the capital gains deferral. So that’s a really big deal.

Brett Swarts 13:22
Well like Blockbuster, you know, how it was only like VCR tapes and DVDs, and then Netflix is like it’s all online? Well, part of the challenge with the 1031 blockbuster, it only works for investment, real estate. It doesn’t work for high end primary homes. We just closed an $8.3 million deal in Palo Alto. It doesn’t work for crypto.

Lauren Cohen 13:41
Oh wow, that’s amazing. So you can offer this for their primary residence as well as for investment?

Brett Swarts 13:48
You got it. Also doesn’t work for cryptocurrency, ours does. We just did a $5 million deal 60 days ago for a gentleman who sold Bitcoin and Aetherium he bought it for 100,000. He worked in Silicon Valley for 20 years, and it’s worth 13 million. He didn’t sell anything Lauryn Hill, he had the deferred sales trust, to $12.9 million gain. That’s multi million dollars of tax deferred opportunity to save and defer and that’s what we did. We did first $5,000,000.13 And then he did another two and a half million this week, as the values of Bitcoin went through the roof and Aetherium all time highs as of last week. Then we close another Bitcoin case for a client. She works for Google. And she’s in her 20s Okay, she has 50 million worth and she did five months. It also works for public stock and private stock. So if you’re an eXp listener, and you want eXp stock gains tax on public, so 1031 exchanges do not work for any of those things. The only thing that worked for his investment, real estate, we could also do business sales, the 1031 doesn’t work for those either. So in fact, American Banker Studies Association to This study Lauren, and this is interesting. They found that 50% of the total net worth of America is tied to three asset types, high end primary homes, commercial real estate, and private equity. Okay, in private equity represents businesses, that’s 50% of illiquid assets. And again, these baby boomers I talked about are getting older, they’re wanting to retire. They’re wanting to diversify. They wanted to sell high and buy low. Right, so we had a client that sold a $7.9 million property in Santa Cruz, she’s in her 70s. She’s done 1031 exchanges her whole life. And she’s looking around going, There’s no way I’m 1031, I’m seven years old, until property doesn’t make any sense to let’s do a deferred sales trust, he paid off 2 million of debt, she talked about 6 million into the deferred sales trust. And right now her powder is dry, a little bit. It stocks, bonds, mutual funds, and then she bought another rental, the brand new depreciation schedule, which is also another thing to talk about. And she was able to defer over about $3 million of tax, okay, because she’s in California. So these are all the things that we help people to do. But also professionals like yourself, Lauren, right, who are helping foreign investors or US investors navigate these tax laws, because it’s no longer about cash flow. It’s actually about tax flow. Yeah. Okay. All right, taxes are going higher, the government has 27 trillion of debt. Right. So what a pause there, make sure you see if any questions, if that makes sense.

Lauren Cohen 16:20
Yeah, so it makes a lot of sense. And, um, you know, what I’d like to understand better for my listeners is you said that the rates are the same for non US citizens as for US citizens. So how does it work? Do you like let’s say, I’m Canadian, which many of my clients are, and they have a real estate investment, they come to you and they want to they don’t know what they want to do. They don’t want to deal with the high market. So exactly what are the steps?

Brett Swarts 16:47
Well, I want to clarify one thing, if you’re referring to capital gains tax, and the rates are the same, but if you’re referring to estate tax, which to me is the big elephant in the room. The tiger by the tail is capital gains tax, we got to defer that figure out a way there. But the elephant is the state tax is 40% of the total net worth, I’m gonna give you a scenario to compare US citizen versus a Canadian citizen. Okay, so let’s imagine there’s two couples, okay. And one lives in Canada, and one lives in the US, there was $52 million, and they own all commercial real estate, to keep it real simple all in the US that they’ve built it up over the last 20 years. Well, one dies and gets what’s called a stepped up basis, and their heirs can inherited capital gains tax for the other one, the same thing stepped up basis as it stands today. But the estate tax if they hadn’t done any estate tax planning, meaning any gifting, family limited partnerships, or lightning life insurance, the one is going to get a $22 million exemption, that’s the US citizen, meaning they’ll have 30 million remaining, they’ll pay 12 million in tax, which is 40% of 12 million. The other one, they only get $68,000 of exemption. Okay, so on $52 million, we’re looking at about 60,000 as an exemption, so on 59 million 932, they’re going to pay $20 million. So if you’re the Canadian citizen listening to this right now, and you have a large estate and you have a state tax challenges, the deferred sales trust becomes your best friend, because upon sale with Lauren to listen, sell the properties and figure all that out. We can move all of the funds outside the taxable estate, which is going to immediately eliminate $20 million of estate tax, which is staggering. Okay. That is the big thing. That’s a huge difference for foreign nationals versus US citizens, or at least the US citizen has the $22 million, except now, for the US citizen, you’re also off the hook because guess what, in 2025, those exemptions are dropping from 22 million married to 12 million married. Okay, 6 million single, we’ve even heard as low as 7 million married three and a half million dollars single. So the intent is to get the funds outside the taxable estate. The challenge is most people can’t get it out fast enough. The 1031 does not solve this. It only maintains a stepped up basis, but it doesn’t deal with a state tax, which is completely separate. So the goal here is step one you sell high, you move it outside your taxable estate, you defer the capital gains tax, okay, then you can go buy more real estate build that wealth up over the years. But if you die, and you don’t have an estate tax solution in place, it’s 40%. Gone forever. Does that make sense?

Lauren Cohen 19:23
Wow. Yeah. I mean, it definitely shows the marriage between the different disciplines about like tax and estate planning. And it’s interesting because my 10 steps to immigrate through real estate, one of them is asset protection. Estate planning is obviously a big part of asset protection. And the other is tax, which, you know, I’m not gonna let anybody invest across borders without tax advice. That’s just not going to happen. But yeah, very important, very relevant. What would you say is your number one tip for people that are looking to invest and develop their business in the US in terms of your company, and just in general?

Brett Swarts 20:00
So, I think local expertise and local partners that can be a partner with you in a deal like I focus on multifamily, senior housing, parks, those are the things that I personally invest in. Those are things I personally broker. And so it’s getting that trust relationship with somebody that you can partner with, on the brokerage level on the lending level on the ownership level on the manor management level. So a couple hacks to that. I mean, consider, especially if you’re a foreign, you know, someone who’s foreign who’s investing, consider partnering with someone who’s on the ground who has a vested interest to run that business. Well, whether that be management operations, whether that’d be the broker finding you the deals, right. I like to roll my commissions into deals and help to help the console and be an advisory to them on a long term basis. So relationships, right, it’s not anything like you’re you’re buying now. But then obviously, make sure the numbers make sense. Make sure you’re not overpaying. The fundamentals of the business on cash flow, and Trinsic value value, add, I mean, all of those things come together. It’s like a Rubik’s Cube, right? You got to get the colors to line up, and you do the best you can to get those things to line up in a way that makes sense for you and your business partners and your family.

Lauren Cohen 21:09
Yeah, got it makes sense. I mean, I completely couldn’t agree with you more. Having boots on the ground, may not always be possible. So you create partnerships and relationships with people that are on the ground, doing what needs to be done, making sure your interests are protected on both sides of the border, whatever that border might be. What value do you think is the most critical when you’re investing cross borders? Is there any one that stands out?

Brett Swarts 21:33
Even like as far as a value for like the property that

Lauren Cohen 21:37
The people Yeah, the team that you’re working with?

Brett Swarts 21:39
Oh, I mean, I would just say there’s probably three values, humble, hungry, and smart. There is a book called The Ideal Team Player for whatever thing you’re trying to build. So you’ve won, you got to make sure that the team members that you’re bringing on are humble, right. And they’re, they know, their strengths. They know their weaknesses, they know their roles. They’re coachable, they work well with others, right? They’re very, very humble, but also very detailed on their strengths. They’re hungry, right, they’re like, as hungry or hungry than you to build wealth and to help you build wealth. Right. And they’re extremely hardworking, right. And then they’re smart and smart, such as the IQ, it’s really the EQ, they can emotionally connect with people on an intimate level and, and relate with people. So those are the three foundational, you know, character values, and then they course the other side would be a couple foundational values of expertise, right? Just track record experience, right? They’ve been through a multiple market cycles, you know, how do they how do they structure deals? You know, what’s their expertise there? So you got to make sure you have both that in line, if that makes sense.

Lauren Cohen 22:41
Yeah, there’s often a disconnect between integrity and Deal, deal flow, unfortunately. But you have to be super careful. And you know, one of the things that I’m promoting is the 10, the top 10 things to avoid when investing across borders. And it’s, they’re almost always going to apply when you’re making an investment. But when you’re investing in another country or across borders, it just becomes that much more complicated, because you have more things to consider. And obviously, that’s where my clients come in. So tell me a little bit about the best. What is your best service offering or your best product offering? For my, my listeners that are coming in from other countries, what would you recommend to them?

Brett Swarts 23:24
Yeah, I mean, just depends on what problem we’re trying to solve. Right? So I think I said earlier, but we’re in the business of just solving problems. So I guess, defining what you’re trying to do, what’s your vision for your wealth for your family, for your tiny energy, for location freedom, like defining that, and then finding out what tool works best for you, right? So on the sale of that thing, right, so that’s subject to US capital gains tax, and it could be the deferred sales trust, then it could be getting with a great broker, like Lauren, to help either refer you to different cities, different places that you’re trying to do the thing, right. So it’s all about connecting the people with the expertise with the right tool. And in the correct order, I’d really encourage people to be early on anything that you’re trying to do, especially for tax planning. Because these these structures and strategies, they’re all very, very time sensitive, meaning you need to set them up prior to the close of Escrow or prior to the buyer removing all contingencies unless you’re in a 1031 we could save a failed 1031. In fact, we just saved one in Georgia $7.6 million sale. Nice. We saved it after his 45 days past it. Okay, in the middle of COVID, he paid off four and a half million of debt. And he just he just parked the money and waited for these deals. Now he’s doing into multiple passive real estate deals, and some into the stock market. So defining the vision defining the challenge, and then what’s the best tool to help you get there? Who are the people to help you get there second, hope that answers your questions aren’t.

Lauren Cohen 24:46
Yeah, who are the people who is the team defining your vision, creating a strategy? A lot of people just decide I want to invest, I want to do this, I want to do that. And there’s no strategy and there’s no due diligence and there’s no plan And and what is the life without a plan would have Benjamin Franklin SAY IT failure to plan is a plan to fail. And it’s true. And I think a plan a strategic plan a business plan a growth plan, an investment plan is critical from the get go because otherwise you’re going to hit brick walls and certainly fall on your face. But how do people reach you? Because I know you have podcasts which I will be on soon, but how do people reach you to learn more about this amazing DST?

Brett Swarts 25:27
You can search YouTube iTunes, Spotify and you can search capital gains tax solutions, you can go to If you are a business professional, you can go to And that’s financial advisors, m&a advisors, Business Brokers, commercial real estate agents, luxury high end Realtors CPAs, and you can learn about how to use this strategy to grow your business add more value to your clients. So and We also have a free ebook on offer everybody it’s nine steps basically to selling your real estate business or cryptocurrency smarter. And it’s kind of a little mini ebook that’s going to break down how how the deferred sales Trust works, you know the track record 25 years 1000s of closes billions under management over doesn’t know change IRS audits, largest deals $125 million, like it’s literally like batting 1000 With all the legal stuff. So you get confidence in what we’re doing, how we’re doing it, why we’re doing it. And then you can also schedule if you have a million dollar net proceeds and million dollar gain very important. That’s our minimum in order to qualify for the deferred sales trust million dollar net proceeds Million Dollar Game and you can schedule a one on one consultation for their team.

Lauren Cohen 26:35
Thank you so much for joining us today. Brett Swartz who is in the Sacramento area California. Welcome. I’m glad you’re here with eXp I’m glad you’re here on our podcast today. I’m Lauren Cohen, signing off from investing across borders, where we teach you how to invest live, work and play across borders. And we do have some financing options to let you get into the US real estate market through my partner Lendai. So thank you again, Brett for joining us. And thank you everybody. Please do subscribe to the podcast on any major channel, Apple, Spotify, Google, you name it. We’re here and it’s a pleasure to be here today presenting Brett and thank you again for joining us take care

Intro/Outro 27:30
Thanks for listening to Investing Across Borders with Lauren Cohen. Make sure to check the show notes for any links and for guests contact information. If you have questions for Lauren, please reach out to her at If you enjoyed today’s episode, please subscribe, rate, review, and share the podcast with a friend.