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Can a Landlord Retire?

Updated: Dec 22, 2018

Investing in real estate can be a great strategy in creating wealth. After years of being a landlord, many investors search for an exit strategy. Traditional methods of exiting create a partial retirement or decrease wealth. The best of both worlds can exist.

Owning investment property can be quite profitable but comes with a handful of responsibilities. A landlord has many tasks to keep cash flowing and tenants happy. When it comes time to retire, shifting responsibilities to a property manager reduces net income, while maintaining expenses and liabilities of directly owning a property.

Selling a property removes concerns of future management, however the transaction creates a taxable event for the seller. Tax liabilities could quickly erase a significant amount of wealth the investor has spent decades to create. Federal and state long-term capital gains tax, depreciation recapture tax, and net income investment tax could reach as high as 40%. After paying taxes, the investor eliminates a big potential source of retirement income from an investor’s portfolio.

Alternatively, a Delaware Statutory Trust (DST) is a smart solution. For nearly 15 years investors have completed 1031 exchanges investing in DSTs as the ‘like-kind’ replacement property.

1031 Exchanges allow tax liabilities to be deferred for now (and potentially eliminated permanently). Reinvesting your sales proceeds in a DST provide an attractive monthly income stream and removes property management responsibilities.

Embrace the freedom and leisure of retirement with a Delaware Statutory Trust. Contact Advantage Wealth Solutions today to discuss this proven real estate exit strategy.


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