Your equity can leave California.
You don't have to.
California property owners may be able to defer 100% of the capital gains tax and turn equity into potential monthly income. Built for ag. Not only for ag.
Or just call us: (559) 272-2776
California Capital Gains Reality
Selling appreciated land or investment property in California? Here's the tax math.
Combined federal capital gains, depreciation recapture, and California's state capital gains rate of 13.3% can hand 30 to 40% of your gain to taxes.
Put plainly: on a large gain, up to $40 of every $100 can go to taxes. California taxes gains as ordinary income at the highest state rate in the country, and the IRS stacks federal capital gains, depreciation recapture, and the net investment income tax on top.
A 1031 exchange into a Delaware Statutory Trust can defer all of that. Your proceeds buy a share of large, professionally managed real estate. The IRS waits. You get potential monthly income without the tenants, fences, or fuel bills.
Most California landowners are quietly wrestling with the same question.
Your land is worth more today than it has ever been. But the second you think about selling, the math gets ugly. Federal capital gains. Depreciation recapture. Then Sacramento taxes your gain as ordinary income at up to 13.3%, the highest rate in the country.
Stack it all up and 40% or more of your gain can be gone. Forty years of early mornings, and the tax man takes a bigger cut of the sale than any drought ever took.
So you hold. You keep working ground you're ready to be done with. You keep fighting the water rules and the costs that climb every season. And Sacramento keeps writing new rules on land you already paid for.
If that sounds familiar, there's a third option most California landowners have never been told about.
Wealthy Californians have been quietly using this tax strategy for twenty years.
It's called a Delaware Statutory Trust. A DST.
The IRS recognized DST interests as qualifying 1031 replacement property in Revenue Ruling 2004-86. Big money California families and their advisors have used it for decades. Most farmers, ranchers, and everyday property owners have never been told about it, because most financial advisors don't specialize in it and most brokers aren't trained to mention it.
Here's how it works. You sell the property. The orchard, the rental, the ground your family has held for decades. Instead of writing the IRS and Sacramento a check for the capital gains, you roll the equity into a group of large, professionally managed properties. Apartments. Self storage. Senior housing. Industrial warehouses. You own a slice of each one.
Every month, potentially, a check hits your account.
No tenants. No tractors. No repairs. The taxes get deferred, sometimes indefinitely. When your kids inherit, those deferred taxes may never get paid at all. And equity that spent a lifetime locked in California ground can finally spread across the whole country.
The kids aren't coming back to run it. And you knew that already.
You raised them on this land. You hoped one of them might want it. But they built their own lives in other towns, and nobody's coming home to run the place.
Leaving the land to all of them sounds fair until you imagine what actually happens. One wants to sell. One wants to hold. One moved to the city twenty years ago and just wants cash. The fight drags on. Legal fees pile up. Relationships crack.
You spent a lifetime building the very thing that tears your family apart.
A DST changes that. Instead of leaving your kids a piece of land to argue over, you leave them clean, divided shares of already performing real estate. Each one gets their piece. Each one decides what to do with it on their own.
No arguments. No lawyers. No Thanksgiving table gone quiet.
The straight talk on risks.
A DST isn't magic and they're not for everyone. You deserve to hear the downside before you pick up the phone.
- It's illiquid. Once your money is in, it's typically in for five to seven years. There's a secondary market if you need out early, but usually at a discount. Don't put money in a DST that you might need tomorrow.
- Income is never guaranteed. These are real estate investments. Tenants leave, markets shift, nothing is promised. Anyone who tells you the income is guaranteed is either lying or doesn't know what they're talking about. Walk away from that conversation.
- You have to qualify. The SEC requires DST investors to be accredited. You need to earn two hundred thousand a year on your own, three hundred thousand with a spouse, or have a net worth over one million excluding your primary residence. If your land is worth any real amount, you likely already qualify.
If a DST isn't the right fit for your situation, we'll tell you on the call. That's worth more than most people realize.
The best call you'll make this year might be the one before you sell.
Call us before you sign anything.
Thirty minutes. No pressure. No pitch. Just a straight look at your land and what your real options might be.
If a DST fits your situation, we'll walk you through it. If it doesn't, we'll tell you that too, and point you somewhere that does.
Either way, you'll leave the call knowing more about your real options than most landowners ever will.
California Property Owner Guide
Get the DST guide for California families.
Plain English on how a DST works for California property owners, who it fits, and what to ask before you sign anything. Free, with no obligation.
Questions first? Call Cameron directly: (559) 272-2776
Securities offered through Arkadios Capital, LLC, Member FINRA / Member SIPC.
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You don't have to be ready for anything. Let's just have a visit.
Free consult. No pressure. We'll tell you straight whether a DST fits.