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Who Sets Up and Sells Delaware Statutory Trusts (DSTs)?
Among various tax deferral strategies available to investors today, Delaware Statutory Trusts (DSTs) remain a popular choice. When used with 1031 exchanges, DSTs allow you to defer capital gains taxes and enjoy not having to deal with day-to-day operations. Those who intend to employ this strategy should be knowledgeable about the DST to determine if it’s a strategy that aligns with their goals.
What Is the Holding Period for a Delaware Statutory Trust (DST)?
When you join a Delaware Statutory Trust (DST), there are certain features that you should take into consideration, such as the DST holding period, which is the length of time you’re expected to keep your investment in the trust before the underlying property is sold.
Is a Delaware Statutory Trust Revocable?
Investing in a Delaware Statutory Trust (DST) can be an appealing strategy for many investors because of potential benefits like passive income and diversification. There may also be tax-deferral benefits if you enter the DST through a 1031 exchange. However, the structure of this “trust” may make it confusing, especially in the context of estate planning. In particular, many investors wonder if DSTs are revocable.
What To Look for in a Delaware Statutory Trust (DST) Attorney
As you consider investing through a Delaware Statutory Trust (DST), it's important to involve experienced professionals to help manage the legal and tax-related aspects of the process. One of these professionals would be a Delaware Statutory Trust attorney — a lawyer who is knowledgeable in the legal aspects of the investment. Hiring one can help you evaluate offering documents, understand your rights as a beneficial interest holder, and assess whether the DST aligns with applicable IRS guidance and your overall transaction objectives.
Comparing Deferred Sales Trusts and Delaware Statutory Trusts
Investors exploring tax-deferral strategies for appreciated real estate have several options to consider. Two common approaches are the deferred sales trust and the Delaware Statutory Trust. These are both called DSTs, which may lead to confusion. However, these two tax strategies are distinct and offer different tax deferral methods.
What Is the Delaware Statutory Trust Act (DSTA)?
Trusts are widely used in estate planning, and some types of trusts have added characteristics that make them advantageous for investors. One of these categories is the Delaware Statutory Trust (DST), which came to be thanks to the Delaware Statutory Trust Act (DSTA). This piece of legislation provided a legal structure that offers flexibility, liability protection, and tax advantages for investors.
Are Delaware Statutory Trusts (DSTs) Safe?
Investing in a Delaware Statutory Trust is a common strategy for accredited investors, especially those undergoing 1031 exchanges that want to enjoy passive involvement. However, there are still plenty who have their misgivings and doubts regarding the safety of this investment. Are Delaware Statutory Trusts safe? If the sponsor and investors follow IRS rules, conduct due diligence, and plan ahead of time, they may offer certain investor protections. However, like all investments, they carry risks that should be carefully considered.
How Often Are Delaware Statutory Trust (DST) Distributions?
Joining a Delaware Statutory Trust (DST) helps you defer capital gains taxes and potentially earn income if the property makes a profit. Given the structure of DSTs and rules set by Revenue Ruling 2004-86, sponsors must distribute the income to investors on a current basis. In other words, you receive money on a regular frequency. Knowing this schedule is important for effectively managing your cash flow and financial planning.
Delaware Statutory Trust Tax Reporting: Rules & Compliance
Entering a Delaware Statutory Trust (DST) as part of your 1031 Exchange strategy is a great way to preserve your capital gains and diversify your portfolio. This can help investors defer capital gains taxes while gaining access to institutional-grade real estate. However, even though you may defer capital gains taxes, a DST does not eliminate all tax obligations. There are still other obligations you’ll need to address to avoid IRS scrutiny, penalties, and possible removal of your tax-deferred status.
How to Evaluate a DST Broker
Joining a Delaware Statutory Trust (DST) can be a tax-deferred strategy for real estate investors using a 1031 exchange. By buying fractional interests using proceeds from a 1031 exchange, you may defer capital gains taxes and potential for passive income from institutional-grade assets. Since you don’t have direct property ownership, you can also enjoy a more hands-off involvement in the DST.
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