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Real estate investments may be an attractive way to pursue your financial goals. However, every investor is different, and each has individual preferences for how to invest. For some, direct ownership and management of property may be satisfying, while for others, that approach is too labor-intense. Delaware Statutory Trusts (DSTs) are worth considering for investors exploring passive options. Investing in a DST may provide some potential advantages of direct real estate ownership without the direct ownership management responsibilities. The IRS has defined a DST investment as direct fractional ownership of commercial real estate.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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