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A DST, or Delaware Statutory Trust, is a trust created under Delaware state law that owns property (the trust, the investors, and the properties can all be located outside of Delaware). A DST often provides individual investors with access to properties they may not be able to obtain individually. The DST Sponsor is the individual or company that creates the trust to hold the assets and takes care of the issuance of the shares to investors.
Investors seeking to defer capital gains taxes on the sale of commercial real estate often purchase shares of Delaware Statutory Trusts (DSTs) to complete 1031 exchanges.
Delaware Statutory Trusts (DSTs) can potentially offer a variety of benefits to investors regardless of where they reside.
Investors who purchase interests in Delaware Statutory Trusts receive fractional shares of pre-packaged investments they likely wouldn’t be able to access as solo investors.
The state of Delaware is a nationally recognized leader in statutory trusts due to legislation that overrides the principles of common law trusts. The popularity of Delaware Statutory Trusts, or DSTs, has grown in popularity since the state in 1988 adopted the Delaware Statutory Trust Act.
Real estate investing in multi million-dollar properties isn’t just for blue blood elites, cryptocurrency and startup billionaires, or world-famous athletes with money to spare. Although wealthy Americans have amassed more money to invest in coveted institutional-grade properties, everyday investors also can participate in these types of investments by purchasing fractional interests in Delaware Statutory Trusts (DSTs).
Owning a commercial investment property can be an excellent source of monthly income. Landlords often realize significant capital appreciation on well-positioned assets in thriving markets that they can use to potentially leave a lasting financial legacy to their heirs.
Unlike a direct real estate investment, investing in a DST is less complicated. There isn’t any rehab that investors must spend money on. There’s no closing cost. The cost-basis is easy to figure out. All of that helps simplify the rate of return (ROR) calculation. In this article, we’ll dig into what you need to know for calculating the ROR on a DST.
A Delaware Statutory Trust may be an option for those who are looking to 1031 exchange from direct real estate into a passive investment. DSTs don’t come with all of the management hassles that direct real estate has. The main reason for this difference is the DST sponsor, which also manages the properties. In this article, we’ll discuss why it’s important to know your sponsor and what to look for in a sponsor when investing in a DST.
We’ve written a great deal about how the Delaware Statutory Trust (DST) can be used to defer capital gain taxes. Furthermore, as the IRS regards DST interests as direct property ownership, they are eligible for use as 1031 exchange replacement properties.
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