Delaware Statutory Trust 1031 Exchange: How It Can Benefit You?

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Delaware Statutory Trust 1031 Exchange

Section 1031 exchange has continuously thrived in the market and is not going away any time soon. Real estate is one of the safest investments investors have ventured upon as its value consistently appreciates through time. The demands on Section 1031 exchanges have increased in the years that have passed because the significance of utilizing section 1031 exchanges in asset management and cost-minimization has become more apparent to these investors. It has been clearer now how section 1031 can be a solution to one of the main issues in costs incurred: capital gains taxes. Capital gains taxes can significantly affect the revenue you expect to receive in making a sale on real estate property as it can be in large percentages. This is why investors have relied on section 1031 to address this issue.

Under section 1031, Delaware Statutory Trust (DST) is a legal entity where fractional ownership is allowed. It qualifies as replacement property. More and more investors have been recommending investing in a 1031 exchange. To know more about it, here are the benefits of investing in a 1031 DST exchange:

  • Investments can be as low as $50,000.
  • It can provide you access to higher-quality properties and tenants.
  • On a current basis, specifically, monthly, all cash, except necessary reserves, are distributed to each owner or investor.
  • Income-generation is guaranteed when you invest in a DST.
  • There is no need to manage day-to-day responsibilities, as DSTs already offers professional property and asset management features.
  • DSTs are one of the ways you can diversify your portfolio, possibly geographically, and more.
  • Investors are protected from liabilities that are greater than the amount of their investment.
  • Major decisions are not something you need to worry about as a single Trustee makes these decisions. This also results in fewer disagreements.
  • Also, DSTs are seen as a single borrower that owns the entirety of the properties. A DST recognized as a single borrower makes it easier for trustees to obtain financing.
  • Potential tax forgiveness can be grated to your heirs due to step-up based on death.

How you can apply for a Delaware Statutory Trust 1031 exchange:

A Section 1031 exchange starts with an exchanger wanting to sell a property. He/she wants to avoid paying capital gains taxes at the moment, so he/she notifies a qualified intermediary. Within 45 days, the exchanger must find someone willing to buy the property. Once the property is bought, the proceeds are transferred to the qualified intermediary to ensure that it will truly be invested in a like-kind property to accomplish the essence of section 1031 as an ‘exchange.’ After having funds transferred, he/she must identify the replacement property.

In this case, it would be the DST of your choice. You must make a thorough evaluation of choosing your DST. Once all is settled in your decision on which DST you should invest in, funds are then transferred into the DST, and the closing of new properties must take place within 180 days, which had started on the first day of your sale date.

1 COMMENT

  1. It was interesting to learn about how a DST allows them to diversify their portfolio and they guarantee income generation while the investments can be a lot better but they won’t need to make major decisions. I can imagine that a business can improve its finances and make sure that they can get some better trusts. Getting some help from a professional could be really useful and allow them to work a lot faster and be more effective. https://tacticalincomeforlife.com/investment-concepts

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