DST 1031 Exchange: Landlord Style Assets Without the Landlord Hassle
The IRS refined and created the 1031 internal revenue code decades ago but within the past 20 years a Delaware Statutory Trust (DST) fund gave people another option to defer their taxes. When selling a business or investment property there may be large gains made on that real estate. As you may be aware, sellers can defer paying those taxes by performing a 1031 exchange.
So where does a DST become useful? One example is when an individual sold their investment property and 1031 exchanged into a new one, but after buying their new property they still had money left over they would like to defer their taxes on.
With that excess cash, if suitable, we can help your clients put that money into professionally managed funds that seek to obtain 5-10% potential returns annually as well as deferring taxes while your client sits back and relaxes.
There are other scenarios where a 1031 investment exchanging into a DST makes sense, and we look forward to working with you and your clients to give them the best experience to explore this opportunity. Our door is always open, and we are dedicated to putting you and your clients first, so please don’t hesitate to reach out with any questions!
Why are Investors Using DST’s?
- Gives the clients access to high quality, professionally managed real estate
- Passive, fractional ownership
- Non-recourse institutional financing
- Portfolio diversification
- Tax deferral
- Ability to identify and close on property quickly
- Capital preservation
- Non-correlating with a market or an index
- Aims to create a source of income while each investment offers different ranges of capital appreciation.
- A personal advisor to help walk you and your client through the DST process and give educated advice
DST vs. Tenancy in Common (TIC)
|DST Investors||TIC Investors|
|Ownership||Own a beneficial interest in the trust||Fractional ownership of the property by deed title|
|Debt||Do not personally assume liability to their invested equity||Must qualify for and assume liability for the property level debt|
|Liability||Are limited on their liability to their invested equity||May assume personal liability above their invested equity|
|Investor Count||May have up to 499 investors||Are limited to 35 investors|
|Expenses||Incur no additional LLC costs||Generally, execute investments through individual LLC|
|Property Types||Can be diversified into multiple DST qualifying properties||May have a difficult time acquiring multiple different properties|
|Taxation||Able to defer taxes through a 1031 exchange||Able to defer taxes through a 1031 exchange|
We are committed to networking with you and giving you another tool that seeks to help expand your options to maximize your financial opportunity and growth!
This is for informational purposes only and does not constitute an offer to buy or sell an investment. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. There are risks associated with investing in real estate properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation. Randall B. Stoltz offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance provided through Stoltz Financial Partners, LLC and Clear Direction Investments, LLC, both of whom are independent of CIS and CAM.