Resources / Capital gains deferral strategies compared

Capital Gains Deferral Strategies Compared: Costs, Risk, and What You Actually Keep

By Sean Whitehead, Structured Settlement Consultant & Content Contributor · August 10, 2026 · 14 min read

Every strategy on this page defers capital gains tax. That's where the similarity ends. They differ in what the law actually says about them, what they cost, what you hold when the dust settles, and what your heirs inherit — and the pages selling each one rarely put those differences side by side, because side by side is where the trade-offs show.

We sell one of these strategies — structured installment sales — and this page compares it against everything else anyway, including where the alternatives win. Every fee figure below is sourced and dated; where the data is old or self-reported, it says so.

Start with one question: what do you want to hold after the sale?

Most of this comparison collapses once you answer honestly. If you want to keep owning real estate, the 1031 exchange and the Delaware Statutory Trust are your lane — nothing else defers as completely or ends as well at death. If you want guaranteed income and a genuine exit, the structured installment sale is built for exactly that. If a meaningful gift to charity is already in your plans, the charitable remainder trust turns that intention into deferral. If you want maximum cash in hand immediately AND deferral, be careful: the strategies promising both are the ones the IRS is actively targeting.

The sections below cover each strategy in brief, with the full head-to-head comparisons linked throughout.

The short version

Cost figures are typical published ranges as of 2026 except where noted; the Delaware Statutory Trust load figure reflects older industry data — see that section. Sources and dates in each section below.

Structured installment sale (IRC §453)

Part of the sale price is directed at closing to an assignment company, which funds a schedule of payments through an annuity from a rated life insurance carrier. Gain is recognized as payments arrive under IRC §453 — the same installment method on the books for decades, reported on Form 6252 — with the buyer's credit risk replaced by an insurer's. There is no separate fee to the seller; compensation is embedded in annuity pricing as a carrier spread of roughly 0.75–1.5%, which is a real cost even though no invoice arrives, and we'd rather you see it stated than discover it implied. Constraints worth equal billing: the structure must be in the purchase agreement before closing, payments are fixed once issued, depreciation recapture is still taxed in the year of sale, and above $5 million in outstanding obligations the §453A interest charge applies. Best fit: sellers of businesses, real estate, farmland, and mineral rights whose goal is income and an exit rather than replacement property.

Model your numbers with the installment sale tax calculator.

Seller financing: carrying the note yourself

The original installment sale — identical §453 tax treatment, no assignment company, no carrier. Costs almost nothing to set up beyond attorney drafting, and it can win the negotiation when a buyer needs terms. The trade: your retirement paychecks depend on the person who just bought your business staying solvent and willing, secured by assets you no longer control. The structured version exists because of how often that bet goes wrong.

Full comparison

1031 exchange

The strongest deferral in the code for one kind of seller: the one who wants to keep owning real estate. Statutory, cheap to execute — qualified intermediary fees of roughly $750–$1,500 for a standard forward exchange per published 2026 QI pricing, more for reverse and improvement structures — and unmatched at death, when heirs receive a stepped-up basis that can erase the deferred gain entirely. The costs are the deadlines (45 days to identify, 180 to close, no extensions) and the continued ownership itself. Real property only since 2018.

Full comparison

Delaware Statutory Trust — the 1031 vehicle

For 1031 sellers who want the deferral without the landlording, a Delaware Statutory Trust holds institutional real estate and qualifies as replacement property under Rev. Rul. 2004-86. The legal footing is solid; the economics deserve scrutiny: front-end loads (commissions, sponsor fees, offering costs) have historically run high — a 2018 industry analysis put the median near 19.8% of invested equity, and sponsor materials commonly acknowledge 10–15% — plus ongoing management fees, all absorbed inside the trust's cash flow rather than billed visibly. Accredited investors only, typical minimums $25,000–$100,000, and interests are locked up until the sponsor sells, typically five to ten years. Not to be confused with the Deferred Sales Trust below — same acronym, entirely different animal.

Full disambiguation

Deferred Sales Trust — the other DST

A proprietary arrangement in which you sell to a trust for an installment note and the trust sells to the real buyer. It claims IRC §453 treatment, and its promoters report decades of clean audits — but no Code section, regulation, or published IRS ruling endorses the structure by name, the audit history is promoter self-reported, and tax professionals have publicly questioned its exposure on constructive receipt and economic substance grounds. Costs: a setup fee around 1.5% of the first $1 million of transaction value and 1.25% above, plus annual trustee fees from roughly 0.5% and administrative fees around 0.35%, plus investment management. What you hold is an unsecured note against a trust whose investments can lose value. Our view, plainly: sellers wanting §453 treatment can get it through structures that don't require a proprietary theory — that's the comparison to press any promoter on.

Monetized installment sale

The strategy promising everything — roughly 93–95% cash at closing via a purported loan, AND thirty years of deferral — for fees around 5–6.5% off the top. The IRS has proposed regulations designating these transactions as listed transactions, featured them on its Dirty Dozen list three years running, and in 2025 the Justice Department sued a major promoter seeking a permanent injunction over hundreds of transactions. The proposed regulations were not yet final as of this writing, and promoters treat that as a green light; we'd read the direction of travel instead. If someone has pitched you one of these, the distinction that matters is simple: a compliant structured installment sale involves no loan against the obligation — the loan is precisely what the IRS is targeting.

Full explainer

Charitable remainder trust

For sellers with genuine charitable intent, a CRT is elegant: the trust sells the appreciated asset tax-free, pays you an income stream for life or a term, and the remainder goes to charity — with a partial charitable deduction up front. Statutory (§664), well settled, and honestly the right answer for the right seller. The costs are real ($3,000–$25,000 to draft, 0.5–1.5% annually to administer, practically uneconomic below about $250,000) and the defining feature is the point: the remainder leaves your family permanently. If the charity is the goal, nothing here beats it. If the charity is a tax tactic, you've chosen the wrong tool.

Qualified Opportunity Fund

Reinvest a capital gain into a QOF within 180 days and defer it; hold ten years and appreciation inside the fund escapes tax entirely. The 2025 tax law made the program permanent, with new rules for investments after 2026. Two cautions: gains deferred under the original program hit the tax return on December 31, 2026 — that date is fixed and cannot be rolled forward — and fund economics (management fees around 2% annually being typical, plus sponsor profit shares) plus a ten-year illiquid hold mean the tax benefit has to outrun real costs. Accredited investors, generally.

The honest cost table nobody else publishes

Notice what the fee column above has in common: every strategy's costs are stated the same way, including ours. The embedded carrier spread in a structured installment sale is a cost even though you never write a check for it — exactly as a Delaware Statutory Trust's load is a cost even though it's absorbed into the trust, and a Deferred Sales Trust's trustee fee is a cost even though it's netted from returns. Any comparison page that itemizes competitors' fees and describes its own product as 'no cost' is telling you something about the rest of its content.

FAQs

What is the safest way to defer capital gains tax?

"Safest" means statutory: 1031 exchanges, structured installment sales, CRTs, and Opportunity Funds all rest on named Code sections with settled or published guidance. The elevated-risk end is the proprietary structures — the Deferred Sales Trust's untested theory and the monetized installment sale's proposed listed-transaction status.

Which deferral strategy has the lowest fees?

Carrying the note yourself costs the least in fees and the most in buyer risk. Among structures that remove that risk, the 1031's QI fee (roughly $750–$1,500 forward) and the structured installment sale's embedded spread (roughly 0.75–1.5%, no invoice) sit at the low end; Delaware Statutory Trust loads and monetized-sale promoter fees sit at the high end.

Which strategies give my heirs a stepped-up basis?

Only the real-estate-ownership paths — the 1031 exchange and the Delaware Statutory Trust. Every installment-based structure passes remaining payments to heirs with the deferred gain still attached, taxed as received.

Are Deferred Sales Trusts and Delaware Statutory Trusts the same thing?

No — they share an acronym and nothing else. The Delaware Statutory Trust is a 1031 replacement-property vehicle blessed by Rev. Rul. 2004-86; the Deferred Sales Trust is a proprietary trust arrangement claiming §453 treatment that no ruling has endorsed by name.

Sources

Primary sources are linked throughout. Fee ranges cited above come from published provider pricing and industry analyses, not government sources, and are noted as such in each section.

• IRS Publication 537, Installment Sales
• IRS, About Form 6252, Installment Sale Income
• IRS, Installment Sales: Real Estate Tax Tips
• 26 U.S.C. §453 (installment method)
• 26 U.S.C. §453A (interest charge on deferred tax)
• 26 U.S.C. §1031 (like-kind exchanges)
• 26 U.S.C. §664 (charitable remainder trusts)
• 26 U.S.C. §1400Z-2 (opportunity zone deferral)
• Rev. Rul. 2004-86, Internal Revenue Bulletin 2004-33 (Delaware Statutory Trusts and §1031)
• Prop. Reg. REG-109348-22, Identification of Monetized Installment Sale Transactions as Listed Transactions, 88 Fed. Reg. 51756 (Aug. 4, 2023)
• Hearing cancellation notice, 88 Fed. Reg. 70412 (Oct. 11, 2023)
• Journal of Accountancy, "Prop. regs. identify monetized installment sales as listed transactions" (Aug. 2023)
• Fox Rothschild, "DOJ Seeks Injunction Barring Promotion of Monetized Installment Sales" (May 2025)

Last reviewed: August 10, 2026.

Nothing above is tax or legal advice, and every figure is a typical published range, not a quote — real transactions price individually, and rules change. Bring your CPA and attorney into any of these structures early. We implement one of the eight; we're glad to model it against any of the other seven with your advisors in the room, and to say plainly when one of the seven wins.