A DST, or Delaware Statutory Exchange, is a form of private equity investing that allows investors to defer taxes on capital gains from real estate sale.

BENEFITS
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Passive income from real estate ownership.

Fractional ownership model – with up to 499 investors, individual investors invest in high quality real estate with less of a financial investment.

Investors all receive full tax benefits despite being fractional ownership.

DSTs are Ideal for investors who currently own and manage investment property but would like to trade that property for a passive investment and get out of property management — especially those entering their golden years. While many think a traditional whole property 1031 is the only option to avoid capital gains taxes, this is not the case and our experienced financial planners can walk you through your options. DSTs are relatively illiquid, long-term investments that investors hold onto for upwards of 10 years.

1031 exchanges offer real estate investors potential 100% deferral of capital gains taxes, but they can be very challenging to execute. There are time requirements (45 days to identify / 180 to close), a limited supply of suitable properties, the chance someone else may swoop in and close ahead of you, and finally, the extensive investment research, due diligence, paperwork, etc. which must be completed in a short time.

WHAT IS HOLDING REAL ESTATE INVESTORS BACK FROM CHOOSING A DST? THEY ARE AFRAID OF SELLING THEIR CURRENT PROPERTY AND EITHER:

As a result, many investors are sitting on investment property that they no longer want to manage. Additionally, if that property is fully depreciated, they are most likely earning far less from it than they would from a DST. DSTs alleviate all of these pain points for the investor while providing the same tax benefits.

DST INVESTMENTS AND TAXES

DSTs satisfy the “like-kind” provision of IRC 1031 (aka 1031 exchange rule). 1031 exchanges work by deferring taxes by rolling proceeds of RE property sale into “like-kind” property. The term like-kind property refers to two real estate assets of a similar nature regardless of grade or quality that can be exchanged without incurring any tax liability. The Internal Revenue Code (IRC) defines a like-kind property as any held for investment, trade, or business purposes under Section 1031, making them a 1031 exchange. This means both properties involved in the exchange must be for business or investment purposes. Personal residences, therefore, do not qualify as like-kind properties.

In other words, DSTs offer all of the same benefits of a traditional 1031 exchange, with none of the potential difficulties.

THE OVERARCHING BENEFIT OF DSTS IS THAT THEY ALLOW INVESTMENT PROPERTY OWNERS TO DO WHAT MOST OF THEM CURRENTLY THINK IS IMPOSSIBLE:

And do all of this without any of the stress or challenges of a traditional 1031 exchange.

INTRODUCTION TO DELAWARE STATUTORY TRUSTS

DSTs offer investors a much simpler means of achieving the tax benefits of a 1031 exchange, along with several other significant advantages not inherent in a traditional exchange.

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1031 EXCHANGES

Section 1031 of the Internal Revenue Code (“1031 Exchange”) provides that real property held for rental, investment or use in a business (“relinquished property”) can be exchanged for “like-kind” real property also held for rental, investment or use in a business (“replacement property”) allowing the Investor to defer his or her Federal, and in most cases, state income tax liabilities. Put simply, this investment option allows the owner of investment property to sell it and buy like-kind property while deferring capital gains tax.

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