Can You Depreciate DST Interest?
Investing in real estate typically involves not just income and expenses but also navigating the tax implications on the value of the investment. Therefore, an investor may choose a Delaware Statutory Trust (DST) to pursue potential gains and the passive nature of the ownership and income, plus the tax advantages.
How Are Delaware Statutory Trusts Regulated?
A Delaware Statutory Trust, or DST, is a real estate investment option that provides investors with a route to fractional commercial property ownership. A DST is a corporation that uses Delaware trust laws to establish a trust. Each shareholder owns a beneficial interest in the trust, holding the properties the trust buys. The IRS states that investors (referred to as trust beneficiaries) are each direct owners of all the trust's assets. As a result, they are entitled to the tax benefits of owning real estate, including the ability to use a 1031 exchange to enter or leave the DST.
Is a Delaware Statutory Trust Irrevocable?
A Delaware Statutory Trust (DST) is an investment vehicle that investors can use to access fractional ownership of commercial real estate assets. DSTs have tax advantages in many situations and are typically eligible for both entry and exit using a 1031 exchange, which sets them apart from many other investment options. DSTs may own various properties, including multi-family housing, office buildings, retail centers, industrial property, medical offices, self-storage, and others.
How do Delaware Statutory Trust Sponsors Make Money?
A Delaware Statutory Trust, or DST, is an investment option that allows investors to purchase fractional interests in a commercial property portfolio and seek to manage tax liability. Although none of the investors or the property needs to be in Delaware, a DST needs to have a Delaware resident as one of the trustees; however, the designated Delaware resident does not need to be an active decision-maker.
What is a Delaware Grantor Trust?
The state of Delaware offers potential income tax advantages and has trust-friendly laws for individuals. These benefits aren’t limited to the residents of the state. Non-residents can use the state’s laws to their advantage by creating a trust fund in Delaware. One type of trust to consider opening is a Delaware grantor trust.
Why Consider a Delaware Statutory Trust?
Real estate investors may be looking for ways to keep more money in their pockets at the end of the tax year. Obviously, there are some cases where taxes cannot be avoided, but there can be a legal way to write off some of your earnings or defer some of the taxes you owe until a later date. Obviously, it’s vital that any tax breaks you find are applied within the framework of the law, as failure to comply with state and federal tax laws can result in hefty fines and more serious penalties. However, knowing how to use tools, such as a Delaware Statutory Trust, can help you legally keep your money in your pocket.
