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What is a Disregarded Entity in a Delaware Statutory Trust (DST)?
A disregarded entity may sound like a complex term, but if you're familiar with pass-through entities, you're already familiar with disregarded entities. There's a little more to know about a disregarded entity, though, which is what we'll go over in this article.
What Is a Delaware Statutory Trust (DST) Sponsor?
A DST, or Delaware Statutory Trust, is a trust created under Delaware state law that owns property (the trust, the investors, and the properties can all be located outside of Delaware). A DST often provides individual investors with access to properties they may not be able to obtain individually. The DST Sponsor is the individual or company that creates the trust to hold the assets and takes care of the issuance of the shares to investors.
How an Attorney Helps with the Delaware Statutory Trust Investing Process
Investors seeking to defer capital gains taxes on the sale of commercial real estate often purchase shares of Delaware Statutory Trusts (DSTs) to complete 1031 exchanges.
What is the Annual Fee of a Delaware Statutory Trust (DST)?
Investors who purchase interests in Delaware Statutory Trusts receive fractional shares of pre-packaged investments they likely wouldn’t be able to access as solo investors.
What are the Laws Around Delaware Statutory Trusts?
The state of Delaware is a nationally recognized leader in statutory trusts due to legislation that overrides the principles of common law trusts. The popularity of Delaware Statutory Trusts, or DSTs, has grown in popularity since the state in 1988 adopted the Delaware Statutory Trust Act.
The Potential Pitfalls of Self-Sponsored Delaware Statutory Trusts
A Delaware Statutory Trust may be an option for those who are looking to 1031 exchange from direct real estate into a passive investment. DSTs don’t come with all of the management hassles that direct real estate has. The main reason for this difference is the DST sponsor, which also manages the properties. In this article, we’ll discuss why it’s important to know your sponsor and what to look for in a sponsor when investing in a DST.
What Property Can a Delaware Statutory Trust Hold?
We’ve written a great deal about how the Delaware Statutory Trust (DST) can be used to defer capital gain taxes. Furthermore, as the IRS regards DST interests as direct property ownership, they are eligible for use as 1031 exchange replacement properties.
How is a Delaware Statutory Trust Taxed?
Investing in commercial real estate through a Delaware Statutory Trust can provide many benefits. DST investors purchase fractional shares in a variety of institutional-grade commercial assets they likely wouldn’t be able to afford on their own, such as large multi-family apartment complexes, class A office buildings, or free standing retail buildings with large national franchise tenants. These assets can help diversify your real estate holdings, as well as potentially provide monthly income that can be sheltered from taxation through interest and capital depreciation deductions.
Delaware Statutory Trust Investment Property Offerings - How They Work and What You Need to Know
As a real estate investor seeking to maximize return and manage tax obligations, you may be interested in Delaware Statutory Trust offerings if you examine options for fractional participation. Like Tenant in Common investments, Delaware Statutory Trust participations are accepted by the IRS to reinvest the proceeds from the sale of a property and defer the realization of capital gains taxes. This status means that you can use a 1031 exchange to enter into or exit from a DST. Unlike a TIC structure, in a DST, the ownership of the properties is held by the trust, and the investors are beneficiaries of the trust. TICs are limited to 35 investors, while DST organizations do not restrict the number of participants.
How to Exchange Real Estate For a Delaware Statutory Trust Property
Many real estate investors are familiar with the tax benefits of a 1031 exchange. By exchanging one property into a “like-kind” replacement property, the investor is able to defer gains. However, 1031s come with some strict deadlines that can be difficult to meet. That’s where a Delaware Statutory Trust (DST) property comes in.
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