Delaware Statutory Trust 1031 Exchange

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Delaware Statutory Trusts: An Innovative 1031 Exchange Solution. Real estate investors will not spend a lifetime avoiding capital gains tax via 1031 exchange

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DSTs are derived from Delaware Statutory law as a separate legal entity, created as a trust, which qualifies under Section 1031 as a tax-deferred exchange. In 2004, the IRS blessed DSTs with an official Revenue Ruling about how to. structure a DST that will qualify as replacement property for 1031 Exchanges.

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However, exchanging those assets into a Delaware Statutory Trust 1031 exchange can potentially provide both parties with residual monthly income without paying capital gains tax. When the DST is dissolved, both parties can independently cash out or roll their proceeds into another tax-deferred 1031 exchange.

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Real estate investors who want the tax benefits of a 1031 exchange without the responsibilities of management might consider the Delaware Statutory Trust.. A 1031 exchange, of course, is the widely used vehicle the IRS created to allow taxpayers to indefinitely, if they wish, defer the capital gains tax on their real estate investment by using the proceeds …

1. Author: Marc Rapport

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More recently, Revenue Ruling 2004-86 determined that a Delaware Statutory Trust qualified as real estate and, as such, could serve as a replacement property solution for 1031 Exchange transactions.

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A Delaware Statutory Trust (DST) is an undivided fractional interest ownership in a trust. 1031 Exchange DSTs have low minimum investment amounts and therefore create an ability to diversify your current rental property into multiple investments in different cities, states, and asset classes such as apartments and net lease retail.

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A Delaware Statutory Trust (DST) is a distinct legal entity created under Delaware law that permits fractional ownership of real estate assets that may be used in a 1031 Exchange.However, to use a DST in a 1031 Exchange syndication program, it must comply with the requirements of IRS Revenue Ruling 2004-86, so that a beneficial interest in the trust is …

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The Delaware Statutory Trust is a mighty vehicle, but just as with any other legal tool, neither the DST, 1031, or power combo of both is without flaw. You may already be familiar with the benefits of 1031 exchanges for real estate asset protection. You may have seen our article about Delaware Statutory Trust advantages for investors.

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That’s why 1031 Crowdfunding has created an Opportunity Zone marketplace, where you can compare and evaluate properties and build a customized real estate portfolio. If you're making a 1031 exchange and investing in a DST, it's essential to identify a potential property within 45 days and close within 180 days.

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A Delaware Statutory Trust (DST) is a legal entity used to arrange for the co-ownership of property. Given a DST’s legal structure, co-owners are entitled to profits earned from the property (such as rent) without any management responsibilities, making DSTs advantageous in constructing multi-investor commercial real estate offerings.

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Likewise, when they sell this property, the three are joined at the hip by the single purpose entity: either they all do an exchange, or none of them do an exchange. The good news is that the IRS has just approved the Delaware Statutory Trust (called a "DST;" also called a Delaware Business Trust) as a fourth disregarded entity for holding 1031

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Delaware Statutory Trusts, or DST, began in 2004 with the IRS Revenue Ruling 2004-86 which detailed the best structure. Each 1031 Exchange DST is a separate legal entity and each investor receives “beneficial interests” in the DST or trust for IRS 1031 purposes. 1031 Exchange DSTs are undivided fractional interest ownership in a trust.

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Delaware Statutory Trusts for 1031 Exchanges. We’ve written in another article about how 1031 exchanges provide taxpayers the opportunity to defer taxes due upon the transfer of a property. We’ve also discussed how tenancy in common structures …

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1031 Exchange to Delaware Statutory Trust (DST) Advisors. Carl and Carlos Sera. we have a free capital gains tax calculator that can give you an approximate answer to the question or you can contact your tax professional or use one of ours for a more precise answer. 4) If the tax savings from utilizing a 1031 exchange are sufficient to make

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Delaware Statutory Trust 1031 Exchange. A 1031 exchange into a Delaware Statutory Trust represents a potential solution that any real estate owner and advisor should consider if confronted with the challenge of selling highly leveraged property. A Delaware Statutory Trust is a beneficial interest in a trust that holds real estate assets managed

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Cons of Delaware Statutory Trust 1031 Exchange . While there are many advantages of using the DST for a 1031 exchange, there are of course some drawbacks as well. One major disadvantage of the DST ownership structure is a loss of control. The trustee or investment manager will be making all investment as well as any property management decisions.

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Frequently Asked Questions

What is a statutory trust in delaware?

A Delaware statutory trust (DST) is a legally recognized trust that is set up for the purpose of business, but not necessarily in the U.S. state of Delaware. It may also be referred to as an Unincorporated Business Trust or UBO.

Are delaware statutory trusts safe?

Delaware Statutory Trusts (DST) are relatively safe investments. Financial specialists interested in the duty deferral advantages of §1031 trades combined with the upsides of partial possession are looking for the well-known options of Tenancy In Common ("TIC") or Delaware Statutory Trust ("DST") co-proprietorship.

What is a 1031 exchange dst?

Many Section 1031 exchange investors do not need or want debt as a part of their replacement property. This all-cash, no debt DST offering provides Section 1031 exchange and cash investors the opportunity for stable returns and the potential for capital appreciation, without a mortgage or any debt associated with the property.

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