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Disadvantages of Delaware Statutory Trust (DST) 1031 Exchange Replacement Properties
Delaware Statutory Trusts (DSTs) offer the opportunity for passive investments in commercial real estate assets that typically are out of financial reach for most solo investors.
How to Transfer a DST after Passing Away
If you own an interest in a Delaware Statutory Trust (DST), you can use it as a wealth transfer tool for future generations. Your DST investments transfer to your designated beneficiaries after you pass away, providing them with the same benefits you had as the original owner.
What Is the Minimum Investment Needed for a DST?
Investors looking to grow their real estate portfolio may consider purchasing ownership in a Delaware Statutory Trust (DST). A DST strives to provide access to high-dollar commercial property for investors with minimal capital.
[Podcast Recap] Potential Tax Benefits of 1031 Exchanges and DSTs for Multifamily Investors
Realized was recently featured on the Multi-family Investor Podcast while attending the ADISA Spring Conference. In this conversation, we discussed the potential benefits that 1031 Exchanges and Delaware Statutory Trusts (DSTs) may have for investors. Here are some of the key takeaways from this conversation.
Do Investors Own the Property in a Delaware Statutory Trust?
Investment in a Delaware Statutory Trust (DST) is an anomaly since the IRS recognizes it as direct property ownership for tax purposes. Yet, each investor owns a fractional share of the properties acquired by the trust. Each investor owns a beneficial interest in the trust, which is the right to receive benefits from assets held by another party. The trust owns the real estate, and the investors are the beneficiaries.
Is a Delaware Statutory Trust (DST) a Pass-Through Entity?
A DST is an investment option that can offer numerous potential advantages for investors. For owners of commercial real estate, reasons for investing may include the pursuit of profits, stable income, and tax advantages. However, the owner pursuing those goals with real property may have the accompanying burdens of accountability for leases, tenants, and other management responsibilities. In contrast, investing through a DST can offer access to fractional ownership of commercial property as a passive investment.
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.
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