Selling a property can be an exciting financial move, whether you're cashing in on a great investment or transitioning to a new phase of life. However, it's essential to be aware of the potential tax implications that come with selling real estate. Without proper planning, you could face a significant capital gains tax bill that eats into your profits. At NorthStar Realty, we work with trusted partners to provide solutions that help sellers minimize their tax burden through strategic options such as 1031 exchanges and Delaware Statutory Trusts (DSTs).
When you sell an investment or commercial property for more than your adjusted basis, the profit is considered a capital gain. The IRS categorizes capital gains into two types: Short-term or long–term capital gains.
To help mitigate the tax burden associated with selling property, NorthStar Realty partners with experts who specialize in various tax deferral and offset strategies. Below are three key strategies we leverage to assist sellers:
A 1031 exchange allows sellers to defer capital gains taxes by reinvesting the proceeds from the sale into a like-kind property. This strategy is especially useful for real estate investors looking to continue growing their portfolios while maintaining tax efficiency. NorthStar Realty connects sellers with qualified intermediaries who facilitate seamless 1031 exchanges, ensuring compliance with IRS regulations.
For sellers who wish to reinvest but prefer a hands-off approach, a DST or Delaware Statutory Trust offers an alternative to direct property ownership. A DST allows multiple investors to own fractional interests in large, institutional-grade properties managed by professional operators. They qualify as a 1031 exchange replacement property, provides passive income with no management responsibilities, and offer diversification across different asset classes (e.g., multifamily, commercial, industrial). NorthStar Realty refers to reputable DST sponsors to help sellers transition their equity into professionally managed real estate investments while deferring capital gains taxes.
Maybe you are a landowner and you aren’t ready to sell but need some tax deductions and want to preserve the land after you are gone. Conservation Easements can be the solution. A Conservation Easement is a voluntary legal agreement that restricts the development of a property to preserve its character or historical value. In exchange, property owners may qualify for significant tax deductions. Conservation Easements’s provide substantial federal income tax deductions, help landowners leave a lasting environmental impact, and can be structured to align with estate planning and philanthropic goals. NorthStar Realty collaborates with conservation specialists to guide sellers through the process of evaluating whether a Conservation Easement aligns with their financial and estate planning objectives.
At NorthStar Realty, we understand that selling a property is more than just a transaction—it’s a financial decision with long-term implications. That’s why we work closely with tax professionals, legal advisors, and other experts who offer tailored solutions that help sellers maximize their wealth while minimizing tax liability. If you're considering selling your property and want to explore tax-efficient strategies, contact NorthStar Realty today. Our team is here to help you navigate the complexities of tax planning and find the best solution for your financial goals.
Your investment deserves a strategy—let NorthStar Realty be your guide.
