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What is a Delaware Statutory Trust?

Upcoming Webinar: 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  |  February 18  |  3:00 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.

DIVERSIFICATION

Investors can divide their investment among multiple DSTs, for a more diversified real estate portfolio.

INSURANCE POLICY

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.

ESTATE PLANNING

All 1031 exchange investments receive a step-up in cost basis so your heirs will not inherit capital gain liabilities.

ELIMINATE BOOT

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.