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Exchanging Vacation Rentals Into DSTs: Satisfying ‘Held for Investment’ Use Tests
If you’re an investor who owns a vacation rental, exchanging into a Delaware Statutory Trust (DST) may be an appealing strategy. Benefits like passive income and hands-off involvement are akin to owning the rental, minus the headaches of direct ownership. However, entering a DST through a 1031 exchange involves a few rules, one of which is that the properties must be like-kind. In other words, both relinquished and replacement assets must be held for investment.
Lease Renewals and Re-Tenanting in DSTs Given Operational Restrictions
While Delaware Statutory Trusts (DSTs) are passive investments that enhance diversification and provide tax-deferral benefits to investors, their restrictive nature creates certain limitations on a few aspects of operations. In this article, Realized 1031 focuses on DST leases and why the trust itself has little to no control over renewals and re-tenanting.
Environmental Issues in DSTs: Who Owns the Risk and What Remediation Is Permitted?
As you may well know, a Delaware Statutory Trust (DST) is a promising investment offering benefits like tax deferral and passive income. However, many risks are involved, including environmental issues that result in losses or destruction of the underlying assets. Repairs and remediations are necessary to ensure continued operations, but the nature of DSTs creates a problem over who is responsible for this risk and how involved the DST can actually be in the remediation efforts.
Ground-Lease DSTs vs. Fee-Simple DSTs Inside a 1031: Structural Differences That Matter
As you enter a Delaware Statutory Trust (DST) for the passive income and tax-deferral benefits, you acquire a beneficial interest under a fractional ownership framework. What about the DST? How does it own the underlying properties?
Casualty or Condemnation at DST Level: Insurance Proceeds, Rebuilds, and Exchange Impacts
Are you considering investing in a Delaware Statutory Trust (DST)? This move is an appealing option for many investors, especially because of the passive income, steady cash flow, and capital gains tax deferrals. However, it’s important that you know certain events can add risk and complexity to the investment.
Tracking Basis Across Multiple DSTs After Several Exchanges (and Why It Matters)
When investing in Delaware Statutory Trusts (DSTs), it’s not unusual to then reinvest the proceeds into another, ensuring continued tax-deferral benefits and passive income. However, as each new investment begins, the complexity of tracking the DST basis becomes more and more intricate.
Multi-State DSTs: Withholding, Nonresident Returns, and Common Pitfalls
As you enter a Delaware Statutory Trust (DST), you begin earning money from the income-generating activities of the underlying properties. However, there is a chance that your DST holds assets across multiple states. This reality presents a few complexities, such as how state income tax is filed and paid.
DST K-1/1099 Packages: Reading the Footnotes Investors Actually Care About
As you’re likely aware, a Delaware Statutory Trust (DST) is a passive investment that provides passive income from the underlying real estate assets. When tax season comes, investors can expect forms like the K-1 or 1099—often thick and filled with numbers, codes, and footnotes.
Chaining Exchanges: Moving From One DST to Another Without Busting Your 1031
As you likely know, Delaware Statutory Trusts (DSTs) offer various advantages, like passive income and diversification. The fact that DSTs have holding periods, however, means a taxable event is always on the horizon. Thankfully, strategies like chaining exchanges are allowed, so you can move from one DST to another through 1031 exchanges, ensuring that you maintain your tax-deferral benefits.
Proceeds at DST Exit: Return of Capital vs. Gain and How This Shows Up on Your Tax Forms
At the end of a Delaware Statutory Trust (DST), the DST sponsor sells the assets and distributes the proceeds to the holders of beneficial interests. If you’re an investor, it’s crucial to know the difference between the original capital and gain from appreciation because of the different tax treatment and reporting requirements. Having this knowledge helps you prepare for your tax obligations and streamline your exit strategy after the full cycle event.
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