Most retiring landlords don’t realize they have options beyond “cash and pay the IRS.” Here’s what every owner who’s held their property 25+ years should know — before they pick up the phone with a broker or buyer.

By Sandy Sanders · Direct Commercial Buyers · Updated 2026

Robert was 71. He’d owned a 24-pad mobile home park in the Florida panhandle since 1989 — bought it for $60,000 with a 10-year SBA loan he paid off three administrations ago. By 2024, the park was worth a little over $480,000. His knees were going. His wife had been telling him for two years to sell.

He talked to two brokers. One wanted a six-month listing agreement and the right to put a sign at the entrance. The other wanted to take photos and put it on LoopNet — strangers driving in to “tour” the property. Robert couldn’t stomach either option.

But the thing keeping him up at night wasn’t the brokers. It was the IRS.

“I bought this for sixty thousand dollars. If I sell it for four-eighty, what does Uncle Sam take?”

Robert H., 71 · MHP owner, Bonifay FL

Run the numbers — federal capital gains, depreciation recapture, 3.8% Net Investment Income Tax — and Robert was looking at a tax bill north of $130,000. On a property he’d built up over 35 years.

“That’s a third of my retirement,” he said. “There’s gotta be something I can do.”

There was. And most owners in Robert’s shoes don’t know about it.

If you’ve owned commercial property — an apartment building, a mobile home park, an RV park, a laundromat, self-storage, a small motel — for 25, 30, sometimes 40 years, the math is brutal.

• Your basis is tiny. (You bought it cheap, in 1990s dollars.)
• Your depreciation has run out. (Decades of write-offs, all gone.)
• Your equity is huge. (The property is worth 5–10× what you paid.)

When you sell, the IRS taxes you on:

• Federal capital gains: 15–20%
• Depreciation recapture: up to 25% on prior depreciation taken
• State tax (if applicable)
• 3.8% Net Investment Income Tax

You earned that equity. You don’t want to hand a third of it to the IRS.

The good news: there are three IRS-approved structures that can legally defer or stagger that tax. Most retiring owners don’t know about them — usually because their CPA isn’t a real-estate-focused CPA.

Here’s how each one works in plain English.

STRATEGY 1: The Installment Sale (a.k.a. Seller-Financed Note)

What it is: Instead of taking a single lump-sum check at closing, you accept a down payment plus monthly payments — typically over 5, 10, 15, even 30 years. The IRS treats each payment as part return-of-basis, part capital gain. You only pay tax on the gain as you receive it.

The benefit: You spread the tax bill over many years instead of one. You stay in lower tax brackets every year. And you keep earning interest on money the IRS hasn’t gotten yet.

Best for: Sellers who don’t need a giant lump sum. Sellers who want monthly income. Sellers who want to keep more of their equity working.

What happened with Robert: He took $50,000 down on his park and a 15-year note at 7% interest. Over the life of the note, he’ll receive close to $700,000 — far more than the $480,000 lump-sum offer he could have taken. By spreading the gain over 15 tax years, he saved approximately $112,000 in federal tax versus a cash sale. He calls it his “mailbox money.”

STRATEGY 2: The 1031 Exchange (a.k.a. Like-Kind Trade)

What it is: Trade your commercial property for another piece of commercial property of equal or greater value. The IRS lets you defer 100% of the capital gains tax. Forever, if you keep trading. If you die holding the replacement property, your heirs get a stepped-up basis — and the deferred tax disappears entirely.

The benefit: Zero capital-gains tax on the sale. You keep all your equity working in real estate.

The catch: You have 45 days to identify a replacement property and 180 days to close on it. The cash in the middle is held by a Qualified Intermediary — you can’t touch it. Tight deadlines, strict rules.

Best for: Sellers who want to stay in real estate but trade an active headache (a park, a laundromat, a mom-and-pop motel) for something passive — like a NNN-leased property that pays them monthly rent without any management work.

STRATEGY 3: The Deferred Sales Trust (DST)

What it is: You sell the property to a trust. The trust pays you over time (similar to an installment sale), but you don’t have to be the one carrying the note. A professional trustee manages an investment portfolio for you — diversified across stocks, bonds, real estate, whatever fits your risk tolerance — and you receive monthly payments from the trust.

The benefit: Defer the tax (like an installment sale), get diversified investment exposure, avoid being the bank, and get more flexibility than a 1031.

The caveat: A DST has to be set up correctly by a qualified attorney before closing. You can’t add a DST after the fact. Plan ahead.

Best for: Sellers who want tax deferral but don’t want to be the lender on a single buyer. Sellers who don’t want the 45-day pressure of a 1031. Sellers who want their equity diversified beyond just real estate.

If you want the simplest exit and monthly income → Installment Sale.

If you want zero tax and you’re comfortable trading into another property → 1031.

If you want diversification and no landlord work → DST.

Many of our deals combine two of these.

When I tell a 70-year-old MHP owner about the Deferred Sales Trust, the response is almost always the same: “My CPA never mentioned that.”

It’s not malicious. Most CPAs don’t focus on real estate. They handle taxes for small businesses, families, retirees with portfolios. A real-estate-focused CPA — the kind who thinks about your cost basis, your depreciation schedule, your installment options — is a different specialty.

If you’re sitting on 20+ years of equity in a commercial property and you’re thinking about selling, get a second opinion from a real-estate CPA. We can connect you with one if you don’t have one. No charge.

Who I Am

I’m Sandy Sanders. I’ve been in commercial real estate for over 30 years, and I run Direct Commercial Buyers — a brand of Sandy Sanders Consulting. We close deals across the U.S., focused on the Sunbelt.

We specialize in the kinds of properties mom-and-pop owners build and hold for decades: apartment buildings, mobile home parks, RV parks, self-storage, laundromats, car washes, motels, mixed-use commercial. We close direct, with our own capital. No brokers, no listings, no MLS.

When sellers call us, we look at their property, send them a written offer in 72 hours with two or three structures (cash, note, or tax-deferred), and close on their timeline. Some closings are 14 days. Some are 12 months. Whatever fits the seller’s life.

I built this because I kept meeting tired owners — folks in their 60s and 70s who’d owned a building or a park since the Reagan administration and just wanted out. They didn’t want a six-month listing. They didn’t want to fix anything. They didn’t want to lose a third of their equity to the IRS. So we built a process around their actual problem.

Disclosure: This article is sponsored content published by Direct Commercial Buyers, a brand of Sandy Sanders Consulting. It is for general education and does not constitute tax, legal, or investment advice. Capital gains scenarios vary by individual circumstance and current tax law. Consult your CPA and attorney before making any decision. Deferred Sales Trusts, 1031 exchanges, and installment sales must be structured according to current IRS rules. Examples cited reference past transactions and do not guarantee future results. We are direct buyers — we are not real-estate agents and do not provide legal, tax, or investment advice.