Exchanging Out of Self-Managed Rentals Into DSTs: Shifting From Active to Passive Without Breaking 1031
Owning and managing a rental property on your own can be challenging. From handling tenants to ensuring the property retains its value, there are lots of tasks and responsibilities that may lead to burnout. You may be considering letting go to ease the burden, but if the property has been acquired through a 1031 exchange, capital gains taxes will be triggered.
What DST Liquidation Looks Like: Timing, Distributions, and Tax Reporting
A Delaware Statutory Trust (DST) has a defined holding period of 5 to 10 years, in which the investment will provide passive income and tax-deferral benefits. Once that’s over, the liquidity event occurs, wherein the sponsor dissolves the DST, sells the properties, and distributes the proceeds to beneficial interest holders.
Insurance in DSTs: Property, Liability, and Business Interruption—Who’s Covered?
Delaware Statutory Trusts (DSTs) have seen increased demand as of late, thanks to benefits like tax-deferral, passive income, and enhanced diversification. Beyond these advantages, investors find DSTs attractive because of their robust security measures. One element of this security is insurance, which provides an additional cushion if any financial issues arise.
DSTs as a Backup Identification Strategy: Disaster Extensions, Fail-Safes, and Practical Steps
A 1031 exchange is a powerful tool for tax deferral, but the IRS has strict deadlines and rules you must follow. One of these rules is the 45-day identification period for replacement properties, which can make acquiring a suitable replacement property challenging. Thankfully, you can use a Delaware Statutory Trust (DST) as a backup strategy to help you maintain your tax-deferred status. Below, Realized 1031 shares how.
Laddering DST Maturities to Manage Reinvestment and Interest-Rate Risk
Today, many passive investors undergoing 1031 exchanges use Delaware Statutory Trusts (DSTs) to complete the transaction. These investment vehicles provide key advantages like professional management, hands-off involvement, and access to institutional-grade assets.
