A 1031 Exchange And DST Investment Can Work Hand In Hand

A 1031 Exchange And DST Investment Can Work Hand In Hand

A 1031 exchange is a unique strategy to defer taxes. If you follow the guidelines laid down by IRS correctly, it lets you defer capital gain taxes that come from the sale of a property. However, you must meet some of the requirements to qualify for a 1031 exchange. For example, you must identify a new 1031 replacement property within 45 days (i.e., during your identification period) upon closing on the sale of your relinquished property. Similarly, you must close your 1031 exchange within 180 days, which begins the day your relinquished property is sold. 

Investing in DSTs is a smart move.

Though DST stands for Delaware Statutory Trust, it isn’t confined to the jurisdiction of Delaware. A DST is an independent legal entity under which each owner or investor, enjoys an interest in the DST for income tax purposes. When you own an interest in a DST, you own an undivided fractional interest in the DST’s property. In recent years, many investors have invested in DSTs to complete their 1031 exchanges. After all, several benefits accompany a DST investment. For example:

  • A DST investment starts as low as $100k, which helps investors diversify their portfolio without any burden.
  • DSTs also provide an opportunity for investors to own real estate without the stress that arises from actively managing real estate.

It is a good idea to plan your investment in advance, knowing the risks that accompany a DST 1031 exchange investment. Each 1031 DST program functions under different conditions, which means the risks and fees associated with the DST investment will also differ.  

Opt for the 1031 DST program if you want to double the benefits.

A 1031 exchange DST investment not only lets you defer capital gain taxes, but it also provides you the benefits of a DST investment. Besides deferring taxes, you also enjoy a regular flow of income without any day-to-day management responsibilities. Plus, you can trade an old investment property for a shared ownership in a bigger property. Isn’t it great? However, whether you invest in DSTs or do a 1031 exchange separately, you must speak to your advisor first. Discussing your requirements and where you stand in your 1031 exchange with an expert can help in minimizing potential financial setbacks. 

“Our tax-deferred 1031 exchange programs can save millions in taxes, increase investor equity, and compound annual cash flow distributions and returns”