Why Investors Select Delaware Statutory Trust (DST) For Investment Purposes?

Also known as unincorporated Business Trusts (UBOs), DSTs began in 2004.  They have become one of the major sources of investment for accredited investors due to numerous advantages.

Some of these advantages include:

Replacement property in 1031 exchange

The primary advantage of the DST is that it can be utilized as a replacement property for 1031 exchange.

Diversification of portfolio

The investors are able to choose multiple DST properties during 1031 exchange that results in diversification in terms of cities and asset classes, etc. 

Minimum investments are low

The minimum investments for DSTs are as low as 100,000 dollars of equity for 1031 exchange. On the other hand, the cash investments in DST can be as low as 25,000 dollars.

Maintaining an LLC is not required

The investors don’t have to pay annual state filing fees as they are not required to maintain an LLC. 

 

Unanimous Owner Approval is not needed

Unlike Tenancy-in-common (TIC), a DST does not require unanimous approval of the investors while dealing with unexpected situations.

Financing is easy

As the lender treats the trust as the only borrower, it becomes quite economical and easier to obtain financing. Also, the participation of individual investors does not impact the credit rating.

If you are looking for a suitable DST as an investment property in the USA, you can rely on FAI 1031. We are a team of experts with in-depth and experience on DST investment and 1031 exchange.

To know more about DST properties, visit this link. 

7 Tips For Section 1031 Property Exchange

Section 1031 of IRS has proven to be a boon for those investors who want to defer the taxes on capital gain.

To make sure that you seamlessly defer the taxes during 1031 property exchange, we present some essential tips.

Here we go…

Tip #1:

Convert vacation home into property held for investment, so that you can use it for 1031 property exchange in the future.

Tip #2:

You must purchase the replacement property with a value greater or equal to the relinquished property during 1031 exchange. This will allow you to defer all of the gains.

Tip #3:

Opt for delayed exchange if you are unable to find someone for an exchange. In this method, a middleman is used who buys replacement property for you by holding the cash after you sell your property.

Tip #4:

Use DST Investments as replacement properties, which will not only offer tax deferral but can also offer desirable returns.

Tip #5:

Review the tax structure for the states during 1031 exchange, if the relinquished property and replacement property are located in the different states.

Tip #6:

Opt for reverse exchange in which you purchase and close replacement property before selling the relinquished property. This process helps in handling the risks which occur in forward 1031 transaction.

Tip #7:

Do research while finding the “Qualified Intermediary” for the effective execution. You can go through the references, and check the experience and technical proficiency of QI. You can also take the support of companies like FAI exchange which can assist you in the process.

To know how FAI exchange can help you in 1031 exchangeprocess, check this link.