What is a Delaware Statutory Trust?
1031 Exchange Solutions for Hawaii Landlords
Do you own an investment property? Are you tired of managing it? Would you like to learn how you could 1031 exchange your property for a similar or higher income while avoiding a massive tax hit?
Join us in an upcoming webinar on how to utilize a DST (Delaware Statutory Trust) in a 1031 exchange.
Thursday | December 21 | 2:00 pm HST
“I just sold a rental I owned for 20 years, bought for $80,000, and sold for $230,000”
– Adrienne Lally
What is a Delaware Statutory Trust (DST)?
A Delaware statutory trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor’s 1031 exchange transaction. A DST takes all decision-making out of the hands of investors and places it into the hands of an experienced sponsor-affiliated trustee.
A typical 1031 exchange involving the eventual investment into a DST has three basic steps:
Key Benefits of DST 1031 Exchanges
NO MANAGEMENT RESPONSIBILITIES
The DST is the single owner and agile decision maker on behalf of investors.
LIMITED PERSONAL LIABILITY
Loans are nonrecourse to the investor. The DST is the sole borrower.
DIVERSIFICATION
Investors can divide their investment among multiple DSTs, for a more diversified real estate portfolio.
INSURANCE POLICY
If for some reason the investor can’t acquire the original property they identified, a secondary DST option allows them to meet the exchange deadlines and defer the capital gains tax.
SWAP UNTIL YOU DROP
The DST structure allows the investor to exchange real properties over and over again until the investor’s death.
ACCESS TO INSTITUTIONAL-QUALITY PROPERTY
DSTs allow investors to acquire partial ownership in properties that otherwise would be out-of-reach.
LOWER MINIMUM INVESTMENTS
DSTs accommodate much lower minimum investments. 1031 exchange minimums often are $100,000.
ESTATE PLANNING
All 1031 exchange investments receive a step-up in cost basis so your heirs will not inherit capital gain liabilities.
ELIMINATE BOOT
Any remaining profit on the sale of your relinquished property is considered “boot.” The excess cash (boot) can be invested in a DST to avoid incurring tax.