Last week we listed 5 reasons why we keep talking about Delaware Statutory Trusts. Here are 5 additional reasons we believe DSTs have become so popular among 1031 exchange investors:
6. No stress over exchange deadlines.
Because an investment in a DST can close very quickly, investors do not have to worry that the acquisition transaction won’t close on time or that they won’t be able to acquire a chosen property because of the competition in the market.
7. 1031 exchange backup plan.
1031 exchange investors can include a DST property among their three candidate properties identified during their identification period. If they cannot acquire their first two choices of identified candidate properties in time to meet their deadlines, the DST property remains an option that can close very quickly to meet the exchange deadline.
8. Eliminate boot.
1031 exchange investors do not like to have to pay capital gains taxes on boot because their replacement property costs less than the value of their relinquished property. Because DST interests can be acquired for lower amounts than most worthwhile investment properties, the remaining value, or boot, can be used to acquire a percentage of a DST property as a second replacement property in the 1031 exchange.
9. Invest the amount you want to invest.
Too often in real estate investing, investors over-extend themselves financially to acquire a suitable investment property. With a DST you can invest the amount that is right for you and acquire the percentage of the property you can afford. Note that there are minimum investments in DSTs, typically $100,000 for 1031 exchange investors.
10. A valuable inheritance to pass on.
If you have intentions of creating a portfolio of income-generating investments that will outlive you and continue to provide for your heirs long after you’re gone, a DST could be a worthy investment candidate. As with all 1031 exchange-qualified investments, your heirs will receive a step-up in cost basis when they receive your DST assets so they will not have to inherit the previously deferred capital gain liabilities.
Join the Crowd today to view our marketplace of DSTs.
When you invest in a DST, you are assigned a fractional ownership of equity and debt, fulfilling your exchange requirements. You will receive a 1099 for ordinary income, 1098 allowing for mortgage interest write-off, and an operating statement or profit & loss statement for depreciation. With a DST, investors can still enjoy the benefits of owning real estate without dealing with the day-to-day responsibilities of actively managing real estate. Call us today to learn more about DSTs and how they may fit within your investment portfolio. (844) 533-1031
While the information provided above has been researched and is thought to be reasonable and accurate, it’s important to understand that all investments, including real estate, are speculative in nature and involve substantial risk of loss. Additionally, private placements of securities are not publicly traded, are subject to holding period requirements, and are intended only for accredited investors who do not require a liquid investment.