What is a 1031 Exchange?
Though Delaware Statutory Trusts are not new, in 2004 the IRS came out with an official Revenue Ruling detailing how a DST could be structured in such a way that it would qualify as a property replacement vehicle for 1031 Exchanges.
Well known to real estate investors, a 1031 like-kind exchange allows you to defer the capital gains tax on the sale of investment property by reinvesting the proceeds into a similar qualifying property.
THE 4 STEPS TO A 1031 EXCHANGE
A Delaware Statutory Trust (DST) is an investment trust established to hold one or more properties in which investors can purchase an ownership interest in the property. Owners hold a passive, fractional interest in the property held by that trust. If structured properly, in addition to tax deferral treatment, this investment product can provide long-term income and asset preservation to accredited 1031 and 1033 Exchange investors.
DSTs include pre-arranged non-recourse financing, with low minimum investment requirements. A nonrecourse debt (loan) does not allow the lender to pursue anything other than the collateral, leaving limited liability only to the equity invested in the fund.
This makes it possible to purchase larger, institutional quality real estate across nearly every real estate sector, including:
What You Should Know
Is a DST
Right for Me?
A DST may be right for you if:
- You seek tax deferral
- You do not want property management responsibilities.
- You seek institutional-quality property.
- It fits into your estate planning. Find out why.
- You prefer limited personal liability.
- You are an accredited investor.
A DST may NOT be right for you if:
- You are an investor who enjoys managing the day-to-day operations of your properties.
- You want control over important decisions such as when to sell, how to remodel or what rent to charge.
- You seek liquidity as DST investments are typically designed for a holding period of two years or more. (Typically, DSTs hold for 5–7 years.)
Frequently Asked Questions
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Available DST Properties
Property pictured is not associated with any current offering.