Carl worked for fifty years.

He bought a small piece of land decades ago to run his service business. He showed up every day. He built something. And over time, that property became worth $4 million.

When Carl decided to sell, he did what most people do. He went to his tax advisor and asked what he should do about the gain.

The advice he got was simple: “You’re too old to exchange. You don’t have any children. Just sell and pay the tax.”

So Carl did.

He paid $1.2 million to the IRS.

The Problem With “Simple” Advice  

Here’s what bothers us about Carl’s story.

His advisor wasn’t malicious. He probably believed what he was saying. And on the surface, it sounds reasonable—if Carl doesn’t have heirs, why bother deferring taxes?

But that logic falls apart the moment you actually run the numbers.

Carl is now sitting on roughly $2.8 million in cash. Let’s say he puts that in a conservative investment earning 4% annually. That’s $112,000 per year in interest income—and he’ll pay taxes on every dollar of it.

Over the next decade, Carl will likely pay another $300,000 or more in taxes on that income..

So the real cost of that “simple” advice? Closer to $1.5 million.

What Should Have Happened  

When we work with clients like Carl, we start with a different question: What do you actually want?

Most people in Carl’s position want a few things. They want income. They want to stop managing property. They want to do something meaningful with their wealth. And yes—many of them don’t have children to leave it to.

None of those goals require paying $1.2 million in taxes.

Carl had options.

Option 1: Exchange into a DST. A Delaware Statutory Trust would have let Carl defer all his taxes while generating passive monthly income. No tenants. No toilets. No management. Just checks arriving every month. And when Carl eventually passes, his beneficiaries (whether family, friends, or charities) receive the property at a stepped-up basis—meaning the deferred gain disappears entirely.

Option 2: A Charitable Remainder Trust. If Carl wanted to support causes he cared about, he could have structured a CRT that provided him income for life, gave him an immediate tax deduction, and directed the remainder to charity. He’d have paid far less in taxes while doing real good in the world.

Option 3: Exchange first, donate later. Our personal favorite. Carl exchanges into income-producing property, defers all the gain, and then donates a portion of his income each year to causes he cares about. This keeps Carl engaged, provides an ongoing purposeful life.  

Option 3 is our favorite because most people in Carl’s position never get asked a simple question: Carl, what’s important to you? When that question actually gets asked, something powerful happens. Clients in Carl’s position become motivated to do good things with their wealth. It gives them purpose.

Any of these would have been better than what happened.

Why This Keeps Happening  

Carl’s story isn’t unusual. We see variations of it constantly.

There are roughly 850,000 people with PTINs in the United States—meaning they’re authorized to prepare tax returns. Of those, maybe 5,000 have meaningful experience with 1031 exchanges.

That’s not a criticism. Most tax professionals are excellent at what they do. But 1031 exchanges are specialized. They’re rare. A typical CPA might see one or two in their tax preparation career.  . Our team sees them every single day.

The result is a massive expertise gap. And when that gap exists, taxpayers pay for it—sometimes to the tune of seven figures.

We reviewed an exchange last month that had been filed by a Big Four firm. The preparer misread the closing statements and reported boot that didn’t exist. The client paid tax he never owed. The depreciation was wrong too. Roughly 80% of the exchanges we review require some kind of correction.

We wish that number was lower. It isn’t.

The Real Point of This Story  

Carl isn’t actually the point.

The point is you—the advisor, the agent, the accommodator, the CPA reading this right now.

When your client says they’re thinking about selling, and they’re “getting older,” and they “don’t have anyone to leave it to”—please don’t let them walk away from an exchange without exploring every option.

Age is never a disqualifier. Management burden is the real issue. And DSTs solve it.

Lack of heirs isn’t a reason to pay taxes. It’s often a reason to structure something even more creative.

“Too old to exchange” is one of the most expensive myths in real estate. Carl’s story proves it.

What You Can Do  

If you’re an advisor with clients approaching a sale, we’d welcome a conversation. We don’t replace your tax professional—we support them. We provide the specialized analysis and documentation that ensures the exchange is reported correctly and all available benefits are captured.Don’t send your clients to get advice from their dentist when they need a cardiologist.   We are always here to help.   

Frequently Asked Questions  

Is there an age limit for doing a 1031 exchange?

No. There is no age restriction for 1031 exchanges. The IRS doesn’t care if you’re 35 or 85—the rules are the same. What matters is whether you’re exchanging like-kind property held for investment or business use. Older investors often benefit more from exchanges because they can move into passive investments like DSTs that eliminate management responsibilities.

What if I don’t have children or heirs to leave the property to?

This actually makes a 1031 exchange more attractive, not less. You can exchange into income-producing property, enjoy the cash flow during your lifetime, and designate any beneficiary you choose—family, friends, or charitable organizations. When you pass, they receive the property at stepped-up basis, meaning the gain you would have paid tax on disappears entirely.

What is a DST and why is it good for older investors?

A Delaware Statutory Trust (DST) is a passive real estate investment that qualifies for 1031 exchange treatment. You own a fractional interest in institutional-quality property—think large new apartment complexes, medical buildings, or distribution centers—without any management responsibility. No tenants, no maintenance calls, no decisions. Just monthly income. It’s ideal for investors who want to exit active property management while preserving their tax deferral.

Can I do a 1031 exchange and still support charitable causes?

Absolutely. You have several options: You can exchange first and donate a portion of your income annually to causes you care about. You can structure a charitable remainder trust that provides you income for life while benefiting charity. Or you can simply designate charitable organizations as beneficiaries of your exchanged property. All of these preserve more wealth than paying taxes upfront and donating what’s left.

How do I know if my tax advisor is qualified to handle a 1031 exchange?

Ask how many exchanges they’ve handled in the past year. Most CPAs see one every few years—which means they’re learning on your transaction. Specialists handle dozens or hundreds annually. If your advisor hasn’t done at least 10-20 exchanges recently, consider getting a second opinion or bringing in specialized support, Exchange Planning Corporation, for the planning, documentation, and reporting of the exchange.