Tracking Basis Across Multiple DSTs After Several Exchanges (and Why It Matters)
When investing in Delaware Statutory Trusts (DSTs), it’s not unusual to then reinvest the proceeds into another, ensuring continued tax-deferral benefits and passive income. However, as each new investment begins, the complexity of tracking the DST basis becomes more and more intricate.
Multi-State DSTs: Withholding, Nonresident Returns, and Common Pitfalls
As you enter a Delaware Statutory Trust (DST), you begin earning money from the income-generating activities of the underlying properties. However, there is a chance that your DST holds assets across multiple states. This reality presents a few complexities, such as how state income tax is filed and paid.
DST K-1/1099 Packages: Reading the Footnotes Investors Actually Care About
As you’re likely aware, a Delaware Statutory Trust (DST) is a passive investment that provides passive income from the underlying real estate assets. When tax season comes, investors can expect forms like the K-1 or 1099—often thick and filled with numbers, codes, and footnotes.
Chaining Exchanges: Moving From One DST to Another Without Busting Your 1031
As you likely know, Delaware Statutory Trusts (DSTs) offer various advantages, like passive income and diversification. The fact that DSTs have holding periods, however, means a taxable event is always on the horizon. Thankfully, strategies like chaining exchanges are allowed, so you can move from one DST to another through 1031 exchanges, ensuring that you maintain your tax-deferral benefits.
Proceeds at DST Exit: Return of Capital vs. Gain and How This Shows Up on Your Tax Forms
At the end of a Delaware Statutory Trust (DST), the DST sponsor sells the assets and distributes the proceeds to the holders of beneficial interests. If you’re an investor, it’s crucial to know the difference between the original capital and gain from appreciation because of the different tax treatment and reporting requirements. Having this knowledge helps you prepare for your tax obligations and streamline your exit strategy after the full cycle event.
Rolling a DST Into an UPREIT via Section 721: Typical Holding Periods and Tax Trade-Offs
Investing in Delaware Statutory Trusts (DSTs) offers a range of benefits, like passive income and diversification. However, you may reach a point where you want to move beyond the advantages of just DSTs and gain access to larger real estate portfolios. One strategy you can use is rolling a DST into an umbrella partnership real estate investment trust (UPREIT).
