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The Limitations of Delaware Statutory Trusts in 1031 Exchanges
The Delaware Statutory Trust (DST) is a popular investment option for a 1031 exchange. For many investors, DST Replacement Property Interests offer the opportunity to exchange into properties that would otherwise be beyond their reach—and enjoy a predictable income stream without any landlord obligations. The appeal of DST 1031 investments is that they allow multiple investors to purchase ownership interests in institutional-quality properties like apartment complexes, office towers, and retail centers. However, investors considering a DST investment should be aware of certain limitations.
Delaware Statutory Trusts And Risk Diversification
Not putting all your eggs in one basket is an adage dating back to the 17th century. At the time, it alluded to the issue of putting a hen’s eggs in one basket. The danger was that, if the basket fell and the eggs broke, everything was lost.
How To Treat Your DSTs During Tax Season
Tax season can be a confusing time of year. As a first time Delaware Statutory Trust (DST) investor, you’ll have an extra layer of confusion to deal with. This article is meant to give you a heads up on what to expect at year-end when it comes to DST tax documents.
Innovations in Delaware Statutory Trusts
With a number of recent innovations, Delaware Statutory Trusts (DSTs) are offering a lot more opportunities for investors. There are now more property types to choose from, along with a couple of new ways to structure your DST. Flexible financing is always a great option to have in your investment toolbox, so be prepared to make some room for DSTs. Towards the end of this article, you’ll learn about special financing that only comes with DSTs. Let’s dive in and evaluate three areas where DSTs can directly benefit investors.
Delaware Statutory Trusts vs. Real Estate Investment Trusts
When choosing to invest in real estate, there are a number of approaches an investor can consider. Two of the most popular investment methods include Real Estate Investment Trusts (REITs) and Delaware Statutory Trusts (DSTs). These two investment options have several potential benefits, which will be discussed below.
D-I-V-O-R-C-E and DST
In her iconic song “D-I-V-O-R-C-E,” Tammy Wynette sings about the heartbreak of a couple that is separating. Throughout the song, Wynette spells out the difficult words, to ensure that the couple’s four-year-old son remains blissfully ignorant about the parents’ breakup.
5 Things to Consider Before Investing in a Multifamily DST
In an environment of increasing property values and interest rates, realizing a return on real estate is becoming increasingly difficult for investors, whether it be an investment into direct property or a fractional ownership structure, such as a Delaware Statutory Trust. While this may be a concern for most, as 89% of investors put their money into real estate1, many are ignoring the crucial aspects of a real estate investment that go beyond the macroeconomic pressures.
A DST For Your Cash Investment
*Update February 2019: Realized has completed it's first DST resale transaction. Much of what we write about focuses on exchanging from a real estate holding into a Delaware Statutory Trust (DST). Thanks to Internal Revenue Code, Section 1031 and Delaware’s statutory law, you can defer capital gains taxes from the sale of your property, without stressing to find a “like” property in a 45-day period. Additionally, that DST gives you the perks of property ownership, while avoiding the “terrible Ts” of toilets, trash and tenants.
Advantages of a Delaware Statutory Trust (DST)
About a year ago, we published an article titled “Disadvantages of Delaware Statutory Trust (DST) 1031 Exchange Replacement Properties” and it quickly became one of our most read articles. In fact, it remains our most popular article today. I worry that readers of that article might think “Why would I even keep reading about DSTs?”
Consider DST, Rather Than Real Estate, Gifting or Donations
Maybe you’re ready to do some estate planning and are figuring out what to do with that rental cottage in the Berkshire mountains, or the small office property you own in Texas. You might be thinking of leaving that property to your family or donating it to your alma mater or favorite charity.
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