A better investment option offers excellent returns as well as stability at the same time. As an investor, it’s your duty to keep hunting for excellent investment opportunities along with having the ability to sustain in any financial circumstances. Engineering profitable investments require an abundance of experience.
To minimize risks attached to an investment, an experienced investor must research the market and make wise decisions. A 1031 exchange investment lets you defer taxes and acquire real estate in shared or individual ownership structures. A Delaware Statutory Trust (DST) is an excellent replacement option for 1031 exchange investors.
How does a DST 1031 Exchange investment work?
A ‘Delaware Statutory Trust’ is a private company or trust that owns income-producing real estate. It not only owns real estate but also manages, controls, and administers high-performing investment properties. A 1031 exchange investor can invest in a DST property and defer up to 100% capital gains tax along with acquiring a premium property.
DSTs let investors own big real estate, which might not be easy to afford individually. DST properties for sale are available across the United States. Industry professionals are responsible for managing DST properties.
Every DST investor gets some sort of protection under the DST common law. The biggest benefit of investing in DST is that you can co-own an expensive property for a small investment.
An investor can directly invest in a DST or use their 1031 sale proceeds to buy a DST property. Your DST investment ensures a fixed share of income, tax benefits, and appreciations.
Individual investments surely guarantee bigger returns. However, it also adds the burden of property management. At the same time, DST investors don’t indulge in property management, which puts DST investments ahead of individual real estate investments.
1031 exchange rules 2020 –
To qualify for a 1031 exchange, you must abide by the following guidelines.
- List your previous property for sale and find a buyer.
- Hire a Qualified Intermediary and enter into a 1031 Exchange agreement along with him.
- Transfer the sale proceeds to your QI and ask their help in property identification.
- Locate one or more replacement options within 45 days after selling your old property. It’s called the Identification Period. Send a written identification of the replacement property, including the street address, to the IRS on or before the 45th day.
- Speak to the seller and acquire the identified property before the end of the 180th day. Your 1031 Exchange will no longer be valid if you missed the deadline.
- Submit Form 8824 to the IRS on the tax day along with other required documents.
On investing your 1031 sale proceeds in a DST property, you receive the following benefits –
- An opportunity to reinvest your 1031 proceeds in a DST property along with deferring capital gains tax.
- You can own big income-producing properties for a little investment because of the DST’s large structure.
- Easy option to expand your investment and diversify your portfolio. You can split your proceeds and invest in more than one DST property at the same time.
- DST properties are managed by industry professionals. So, you don’t need to look after your property.
These major benefits cannot be ignored. There are very few investment options as beneficial as a DST investment. DSTs are private trusts managed by a group of people called sponsors or trustees.
Being the master tenant, the real estate sponsor firm is solely responsible for looking after every property. The firm acquires properties under DST and then open up the trust for potential investors to buy their share of interests in the property. If you are looking for a highly-profitable and stress-free investment option, DST is your thing.
Don’t let the opportunity slid away. Connect with a 1031 exchange expert today.