Depreciation is an integral factor when owning commercial/investment real estate. When owning a
property of this kind, depreciation can help shelter income generated from the property. There are
programs like cost segregation that can accelerate depreciation for the benefit of the property owner.
The key is to use depreciation to increase wealth and that is something that the Deferred Sales Trust can
accomplish. When a property owner decides to sell his property and retire, depreciation comes back and
is part of the tax on the sales proceeds.

If a 1031 is being transacted, the depreciation already taken is passed on to the new 1031 replacement
property so the new property may get a partial depreciation schedule but not a new depreciation
schedule. Therefore, the property owner may not get a maximum depreciation benefits available.
Throughout history, we have witnessed Dynamic Duos. For example, Laurel and Hardy. Batman and
Robin. Fred Flintstone and Barney Rubble. The Blues Brothers. John Wayne and anyone. And of course,
the most famous Dynamic Duo, cattle drives and beans.

But now, there is a new Dynamic Duo in town that can help create more real estate
wealth…depreciation and the Deferred Sales Trust.

First, if a property owner wants to sell and retire, depreciation recapture comes back into the sale for
tax purposes. However, when selling the property and using our DST, most of if not all the depreciation
taxation can be deferred, and a cash flow can be generated on the entire pretax sales proceeds resulting
in a larger lifetime retirement income than if taxes had been paid first.

When using our DST instead of a 1031, we can create even more wealth for the property owner. Unlike
a 1031, the owner can get a new depreciation schedule when he sells his property using our trust and
buys a replacement property. When he sells that property, again he can defer most if not all the
depreciation recapture and get a new depreciation schedule on the new property and so on. More of
the depreciation benefits are deferred which may create more real estate wealth for the property
owners. Another great opportunity using the Deferred Sales Trust.

I’ll take this Dynamic Duo over cattle drives and beans every time. Unless I am really hungry.