What is a Delaware Statutory Trust?
“I just sold a rental I owned for 20 years, bought for $80,000, and sold for $230,000”
– Adrienne Lally
President Biden’s “American Families Plan” proposes to eliminate like-kind exchange treatment for gains greater than $500,000. We must oppose this proposal now.
FOR MORE INFORMATION CLICK ON THE LINK BELOW
1031 Exchange Solutions for Hawaii Landlords
If you are thinking of selling an investment property, but don’t know where to put your money for a similar return without paying the massive tax hit upfront, please attend the upcoming webinar we’re hosting on DST (Delaware Statutory Trust). Major tax changes coming.
Thursday | June 17 | 1:00 pm HST
If you are unable to attend an upcoming webinar and would like to watch a recording of one of our previous webinars, please fill out the form to the right to gain access to the full version of the video.
What is a Delaware Statutory Trust (DST)?
A Delaware statutory trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 exchange transaction. A DST takes all decision-making out of the hands of investors and places it into the hands of an experienced sponsor-affiliated trustee.
A typical 1031 exchange involving the eventual investment into a DST has three basic steps:
Key Benefits of DST 1031 Exchanges
NO MANAGEMENT RESPONSIBILITIES
The DST is the single owner and agile decision maker on behalf of investors.
LIMITED PERSONAL LIABILITY
Loans are nonrecourse to the investor. The DST is the sole borrower.
Investors can divide their investment among multiple DSTs, for a more diversified real estate portfolio.
If for some reason the investor can’t acquire the original property they identified, a secondary DST option allows them to meet the exchange deadlines and defer the capital gains tax.
SWAP UNTIL YOU DROP
The DST structure allows the investor to exchange real properties over and over again until the investor’s death.
ACCESS TO INSTITUTIONAL-QUALITY PROPERTY
DSTs allow investors to acquire partial ownership in properties that otherwise would be out-of-reach.
LOWER MINIMUM INVESTMENTS
DSTs accommodate much lower minimum investments. 1031 exchange minimums often are $100,000.
All 1031 exchange investments receive a step-up in cost basis so your heirs will not inherit capital gain liabilities.
Any remaining profit on the sale of your relinquished property is considered “boot.” The excess cash (boot) can be invested in a DST to avoid incurring tax.