Passive Ownership Investment Real Estate with a Delaware Statutory Trust (DST)
Do you own investment real estate? Tired of Property Management and tenant issues? Is your hair grey? Are you interested in continuing to own real estate structured for tax-sheltered income, potential appreciation –all with out property management?
Consider a tax-deferred 1031 exchange into a diversified portfolio of commercial Delaware Statutory Trust(DST) properties which are structured by real estate firms with significant experience and strong operational resumes.
DST’s have relatively low minimum investments of $100k and utilizing the 1031 exchange replacement property rules, owners can exchange the proceeds from a single property into multiple DSTs –creating a portfolio of diverse properties that is composed of different fund sponsors, property types and provides geographical diversification –thus serving to help reduce the risk inherent in concentrated assets.
Delaware Statutory Trusts enable owners to reap all the potential benefits we know and enjoy from real estate, which may include:
- Monthly cash flow/income potential
- Continued tax deferral through future 1031 exchanges
- Property Diversification by asset class and location
- Potential for property appreciation
- Sheltering income from taxes through depreciation
- Hedging against inflation
- Maintaining the opportunity for appreciation
- Providing a full step-up in tax basis upon the death of an owner
Furthermore, DSTs have the potential to be an effective estat eplanning tool as they require no active management and can be transferred to beneficiaries thus eliminating potential inheritance concerns and discounting valuations in estate planning.
DST’s are a popular exchange solution which can be used to address the changing of one’s goals & family objectives–and desire to own interest in passive ownership interest in professionally managed commercial properties. For additional information, including a phone call or zoom meeting, contact us at (858) 597-1980.
It is important to note that DST investing is subject to specific eligibility criteria, and only individuals who meet the definition of an accredited investor are permitted to participate.
DST 1031 properties are only available to accredited investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years; or have an active Series 7, Series 82, or Series 65). Individuals holding a Series 66 do not fall under this definition) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney. Before considering a DST investment, it is crucial to evaluate your eligibility as a qualified investor. Our team is committed to assisting you in this process, ensuring that you meet the necessary requirements to participate in DST opportunities. Additionally, we are here to address any questions you may have and provide detailed information to guide your investment decisions.
Please be aware that DST investments involve risks and considerations which include but are not limited to substantial fees and expenses, inability of the DST to actively manage the property, strict timing limitations and risk of not meeting requirements for 1031 exchange tax treatment, and other negative tax consequences. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies, lack of liquidity with restrictions on ownership and transfer. Potential cash flow, returns and appreciation are not guaranteed and could be substantially lower than anticipated. Diversification does not guarantee profits or protection against losses.
Additional risks and considerations related to investing in 1031 DST commercial real estate include, but are not limited to, general real estate risks, financing risks, tax risks, interest rate risk, management risks, operating risk, market risks such as supply and demand, changing market demographics, tenant turnover, tenants inability to pay rent, acts of God such as earthquakes, floods or other uninsured losses. There are also potential risks relating to the trust structure and the potential for adverse changes in laws and regulations. This material is not to be interpreted as tax or legal advice.