There could be a situation when you fail to identify a replacement property during your identification period. Many 1031 exchanges are not completed every year because of investors facing problems in property identification. If you’re also stuck in property identification, you can do either of the two things – keep hunting and hope that you’ll get your desired property before the deadline or get rid of your worry for once and all by investing in DSTs. You can do a 1031 DST Exchange and still be able to defer capital gains taxes.
DST Investments Qualify as 1031 Replacement Properties.
Post selling your investment property, you have 45 days’ time to identify one or more replacement properties and save your 1031 exchange. However, to save yourself from the suffering of finding an ideal replacement property, you can invest in a DST and complete your exchange. A DST or Delaware Statutory Trust is a private trust that owns, manages, and sells investment properties. By investing your 1031 proceeds into a DST, you get ownership of a DST property. Investors prefer a DST investment because of two reasons –
- With a DST investment, there is no pressure of property identification.
- DSTs guarantee a regular flow of income.
A DST Investment is Beneficial because –
- It offers freedom from property management – Unlike personal properties, DST properties come with pre-arranged property managers. DSTs are one of the best passive investments in which property owners don’t need to indulge in property management.
- You can start a DST investment with less capital – Another advantage of a DST investment is that you don’t need to invest big. You can co-own a premium investment property for a price ranging between $100K-200K (depending upon the size of the DST).
- DSTs let you invest in multiple properties – At once, you can invest in as many DST properties as you want. You can split your 1031 proceeds and invest them into multiple DST properties.
Compare and Choose from a Wide Selection of DST Properties.
Having a 1031 DST properties list can help you choose an ideal property. However, getting hold of a property list is not that easy. You can wander on the internet for hours and still not be able to find any. You can speak to a local real estate broker or a firm, and they might help you. The best way is to make a list of the websites that offer DST properties and directly contact them.