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In this growing world of 103 1 be taken into consideration is a Delaware Statutory Trust. As this is not a new concept, but the current tax exchanges, it’s very difficult for the person to know from where to start with. The options which can laws have made this type of investment an increasingly popular option that can act as a boon for 1031 exchange investors.
Delaware Statutory Trust (DST) is the entity set up for business purposes. DST is established under the Delaware Statutory Trust Act, 1988 and recognized by Delaware state law.
It is formed as a private governing body under which the property is managed, held, administered, and invested. Under DST many investment properties are combined together to form a trust, and the investor is allowed to buy the shares of the trust according to his capacity.
DST properties can be in different states of the USA.
The reason for which DST is preferred over individual real estate investments is that, in DST, an investor will have a regular income even for small investments.
Advantages of DST’s:
- DST’s create a valuable inheritance for our heirs. Suppose if you are having an intention of creating income generating investments for our heirs long after if you are gone, a DST could be a worthy investment.
- It gives the opportunities for the diversification of your investment like if you don’t want to invest your entire amount in the single property then you can split your investment among multiple DST properties; so it gives you the opportunity to diversify your real estate portfolio.
- DST’s can be used as a backup plan because during the identification period of the 1031 exchange DST property can be used as one of the three candidate properties. Suppose if you cannot acquire the first two choices of identified candidate property to meet the deadline, DST property remains as an option that can be closed very quickly to meet the exchange deadline.
Is it right for you or not?
Now that you have a better understanding of Delaware Statutory Trusts, and you have to decide whether it’s the best type of investment for you to be making. The current tax laws have made DSTs a preferred investment vehicle for passive 1031 exchange investors. Multiple owners are involved in this and controlled by the master tenants. DSTs provide a number of potential advantages to investors. They can be an effective tool for building and preserving wealth.