We have discussed the advantages of investing in Delaware Statutory Trusts (DSTs). But DSTs aren’t risk-free investments. Quite the contrary. DSTs are complex investment products, meaning you should consider multiple factors when finding – and selecting – the right trust to invest in.
DSTs (Delaware Statutory Trusts) are unique real estate investments that provide some potential benefits to investors, particularly those who are executing a 1031 exchange or simply want to transition from active investment to passive. Here is how a DST investment works:
If you’re considering a Delaware Statutory Trust, you could find the array of offerings confusing, perplexing, and frustrating. Which DST is the right one for your risk tolerance and investment goals?
Real estate investors who need to complete 1031 exchanges may choose to invest sales proceeds from their relinquished properties into Delaware Statutory Trusts (DSTs).
The depreciation deductions for a DST are based on the cost of the underlying real estate assets. Investors can claim depreciation deductions for the remaining useful life of the real estate assets. Investors who sell their interest in a DST may have to recapture any depreciation deductions that they have claimed. Let’s go through the details of how all of this works.
DST tax filings are a little different from other investments. The forms you receive from the DST sponsor aren’t standardized across DSTs. Depending on your entity type, there are different associated tax filing deadlines as well. We’ll cover what this means for you as a DST investor.