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Does a Delaware Statutory Trust Hold Title to Real Estate?
Real estate investors who need to complete 1031 exchanges may choose to invest sales proceeds from their relinquished properties into Delaware Statutory Trusts (DSTs).
Can You Depreciate a Delaware Statutory Trust?
The depreciation deductions for a DST are based on the cost of the underlying real estate assets. Investors can claim depreciation deductions for the remaining useful life of the real estate assets. Investors who sell their interest in a DST may have to recapture any depreciation deductions that they have claimed. Let’s go through the details of how all of this works.
DST Tax Filing Deadline: What to Know
DST tax filings are a little different from other investments. The forms you receive from the DST sponsor aren’t standardized across DSTs. Depending on your entity type, there are different associated tax filing deadlines as well. We’ll cover what this means for you as a DST investor.
How To Buy Into A Delaware Statutory Trust
Delaware Statutory Trusts (DSTs) are legal entities created using Delaware Trust laws to simplify ownership of fractional property interests. DSTs offer several potential advantages to accredited investors, including low minimum investment requirements, tax-advantaged income, and the ability to enter and exit the investment using a 1031 exchange.
Can You Invest in a DST Without a 1031?
Rolling over proceeds from the sale of an investment property into a Delaware Statutory Trust (DST) is one option for investors who need to complete their 1031 exchanges and benefit from the deferment of any capital gains tax liability generated on the disposition of their relinquished properties.
Using a Delaware Statutory Trust in Estate Planning
Estate planning is complex, particularly if many of your assets are in real estate. Determining an equitable division can be challenging if you are distributing real estate to a group of heirs. To devise a fair distribution, you must evaluate market value, asset performance, liquidity, geography, and more. If you bequeath one property to be shared by multiple heirs, you may unintentionally create conflict between the recipients.
Is a Delaware Statutory Trust (DST) a Pass-Through Entity?
Investors often have questions about tax considerations related to DSTs (Delaware Statutory Trusts), including whether these trusts are pass-through entities.
Is a Delaware Statutory Trust (DST) a Legal Entity?
Yes, a Delaware Statutory Trust (DST) is a separate legal entity from its investors. This means that the trust's assets are not subject to the personal creditors of the investors, and the investors are not personally liable for the trust's debts. DSTs are also considered to be pass-through entities for tax purposes, which means that the investors only pay taxes on the income they receive from the trust, not on the income of the trust itself.
Do Investors Own the Property in a Delaware Statutory Trust?
The Delaware Statutory Trust (DST) is a legal entity formed in the state of Delaware. The idea behind this structure is that the trust buys and manages real estate assets. Accredited investors then purchase fractional shares of that trust.
What Are the Advantages of Investing in a Delaware Statutory Trust in California?
Delaware Statutory Trusts (DSTs) can offer several advantages to California investors. These can include:
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