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Can You Sell Shares of a Delaware Statutory Trust?
Selling a fractional interest in a Delaware Statutory Trust (DST) begins by reaching out to the advisor who assisted with the original DST paperwork. The advisor plays a key role in coordinating the Delaware Statutory Trust liquidity process, collaborating with the DST 1031 Sponsor to locate a suitable buyer for your share. This organized approach ensures that all legal and financial considerations are addressed, creating a smooth transition that aligns with both the seller's needs and regulatory requirements. It's essential to follow this process for a successful sale and to ensure that all parties are in compliance with the laws governing DSTs.
What is Delaware Statutory Trust (DST) Leverage?
1031 exchanges can be extremely useful tools for investors to use in maximizing their opportunity to reinvest the proceeds of a property sale. 1031 exchange rules require that the replacement property be of an equal to or greater value than the relinquished asset, and the debt levels must also match. It is in regard to the debt levels that the reference to leverage appears. DST leverage refers to a Delaware Statutory Trust keeping a mortgage on the property, assigning investors a share of the debt. It often appeals to exchangers seeking debt replacement for fully tax-deferred exchanges, as it matches their financial requirements.
How Delaware Statutory Trust Ownership Structures Work
Delaware Statutory Trusts (DSTs) are real estate investment vehicles that allow multiple investors to own a fractional interest in a single property. DSTs are established by a Sponsor, who identifies and acquires all properties held under trust. Investors then purchase fractional shares in the DST, which gives them a right to a portion of the property's income and appreciation according to the pro rata share of their investment.
Delaware Statutory Trusts (DSTs) And 1031 Exchange Requirements: What You Need to Know
26 U.S. Code § 1031 – known more commonly as the “1031 exchange” or “like-kind exchange,” allows investors to “swap” real estate holdings. When performed correctly, the 1031 exchange can help defer taxes on capital gains or depreciation recapture taxes. The requirement is that the relinquished and replacement properties must be used for investment or business purposes.
Can You 1031 Out of a DST?
DSTs (Delaware Statutory Trusts) have become popular vehicles for 1031 exchanging into. Investors only need to find the right DST rather than the right property, which can be difficult under strict time constraints.
What are the Responsibilities and Duties of DST Trustees and Beneficiaries
The Delaware Statutory Trust (DST) is a passive investment structure that offers investors partial ownership of real estate properties. In some instances, this investment type can provide certain benefits to investors, including access to certain real estate investment types, potential portfolio diversification, and possible cash flow.
Key Factors to Examine When Reviewing a Delaware Statutory Trust (DST) Investment
Investing in a Delaware Statutory Trust (DST) gives you the potential to invest in commercial real estate assets that otherwise might be out of reach. Through a DST, you acquire fractional shares in the trust. And the trust, in turn, acquires and manages real estate assets. Such an investment could mean regular cash flow and potential asset appreciation.
What is Revenue Procedure 2000-37?
The IRS closely oversees the eligibility of 1031 exchanges to ensure that taxpayers adhere to the rules in order to receive the potentially substantial benefits of the transaction. A 1031 exchange can allow an investor to defer the capital gains taxes that would be due on the sale of their investment property if they reinvest the entire proceeds (not just the gain) into a “like-kind” replacement property within 180 days.
What are the Differences Between a DST and Traditional Real Estate Investments?
Investors have a multitude of options when it comes to investing in commercial real estate (CRE).
Ways to Manage Risk When Investing in a Delaware Statutory Trust
A Delaware Statutory Trust (DST) is a passive investment. However, passive doesn’t mean risk-free. There are still many potential pitfalls that investors need to be aware of before investing in a DST. This article will review several DST-related risks and how to help manage them.
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