Master Tenant vs. Delaware Trustee: Who Does What in a DST?
As you enter a Delaware Statutory Trust (DST) for tax-deferral and diversification benefits, you’ll learn lots of specifics, like the concept of the master tenant and the DST trustee. You may find these terms confusing because of their similarities, but the master tenant and trustee are two totally distinct parties. Knowing the differences helps you understand how your investment is managed and protected.
Bankruptcy-Remote Structures in DSTs: How Investor Liability Is Isolated
Many modern investors find Delaware Statutory Trusts (DSTs) appealing because they offer tax-deferral benefits and diversification without the headaches of hands-on management. Beyond these well-known benefits, these investments also follow a bankruptcy-remote structure that helps protect investors from liabilities tied to sponsors and other investors.
Understanding ‘Prohibited Activities’ Under Revenue Ruling 2004-86
Delaware Statutory Trusts (DSTs) became eligible for 1031 exchanges under Revenue Ruling 2004-86, which outlined the structure of qualified DSTs. The decree also mandated prohibited activities that would disqualify the DST from tax-deferral benefits. These so-called “seven deadly sins” are mostly a concern for DST sponsors, but knowing them as an investor helps you evaluate the compliance and long-term stability of the DST investment. Realized 1031 goes in-depth about these prohibited activities below.
Why DSTs Don’t Do Capital Calls (and How Sponsors Manage Major Repairs)
Investors find Delaware Statutory Trusts (DSTs) appealing because the structure allows for hands-off involvement, enhanced diversification, and tax deferral through 1031 exchanges. The same structure that provides these advantages, however, creates certain limitations, such as the fact that DSTs cannot make capital calls to address repairs and other contingencies.
Depreciation in DSTs Post-Exchange: What Carries Over and What Resets?
As you invest from a 1031 exchange into a Delaware Statutory Trust (DST), one concern that you might want to consider is depreciation. What happens to the depreciation from the previous property? Do you get a fresh start now that the DST has several underlying income-generating assets? The answer isn’t straightforward, but it’s largely reliant on how tax laws view your basis, what’s considered “new,” and what “carries over.”
State Sourcing of DST Income for Nonresidents (and When Composite Returns Make Sense)
Investing in a Delaware Statutory Trust (DST) gives you access to income from several underlying properties within the DST. This structure offers benefits such as enhanced diversification and revenue from institutional-grade assets. Tax-deferral benefits, at the federal level, are also applicable when you finish a 1031 exchange through a DST.
How Appraisals Influence NAV in Passive Real Estate
For seasoned real estate investors, understanding the interplay between appraisals and the net asset value (NAV) of their investment properties is crucial. This dynamic is particularly significant in the realm of passive real estate investments, such as REITs or real estate-focused mutual funds. Appraisals can often make or break the perceived value of these investments, directly impacting financial decisions and strategies.
What “Core,” “Core-Plus,” “Value-Add,” and “Opportunistic” Mean in Passive Funds
In the realm of investing, particularly within real estate, understanding different strategies is crucial for successful portfolio management. When it comes to passive funds, investors often encounter terms like “Core,” “Core-Plus,” “Value-Add,” and “Opportunistic.” These classifications are key to determining investment strategies and aligning them with one's risk tolerance and return expectations.
Sponsor Evaluation for Passive Investors: Track Records, Teams, and Process Controls
In the world of passive real estate investments, particularly within Delaware Statutory Trusts (DSTs), selecting the right sponsor is crucial. Evaluating sponsors goes beyond merely examining properties; it's about understanding the integrity and capability of the people and processes that will ultimately determine your investment's success.
Understanding Use of Leverage in Passive Vehicles
Leverage in real estate investing is akin to a double-edged sword. It can magnify gains or amplify losses. For investment property owners, understanding how leverage works, especially in the realm of passive vehicles such as Delaware Statutory Trusts (DSTs), is crucial for informed decision-making and risk management.
