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What Is A 1031 Exchange DST?

Abbreviated as DST, 1031 Exchange Delaware Statutory Trust, is a real estate entity that was designed to defer all capital gain taxes from a rental property sale into a real estate portfolio. Similar to TIC, DST helps you build a stron investment portfolio and save a lot of money by deferring capital gain taxes. The following information will help you understand everything 1031 exchange DST. Deferring

1031 Exchange DST: The Properties

1031 Exchange DST is associated with a number of properties. Some of the biggest properties of 1031 Exchange DST include multifamily apartment based buildings and self and storage buildings. Others include retaining centers and medical offices. Usually associated with long-tern based lease contracts, these properties can help you build strong DST portfolios. 

1031 Exchange DST and Financing

According to experts, non-recourse in DST 1031 exchange is usually long term, in nature. Plus, it’s already locked. Thus, investors encounter less closing risk when it comes to the 1031 exchange DST. However, you must identify a replacement property within the timelines spelled out in the IRS. Typically, a loan under the DST exchange ranges from 40 to 65 percent.

1031 Exchange DST and Property Appreciation

Normally, the 1031 Exchange DST allows you to defer capital gain tax. Here, you can do another 1031 exchange based DST into a like-kind replacement property—as long as you comply with the timeless. It’s important to note that exchanging 1031 property can lead to capital gains due to appreciation. You can invest in a different portfolio without receiving proceeds from the property. This allows you to save a lot of money (i.e. from deferring capital gain taxes).

DST 1031 Property

Abbreviated as Delaware Statutory Trust, DST represents an entity for holding a real estate property title. Similar to limited liability and LLC, DST can hold any type of real estate title. The only difference is that a 1031 exchange DST property must fall under the link kind exchange. According to IRS, a DST exchange must be more than $100,000. This allows you as an investor to diversify your exchange proceeds across multiple properties. Also, there are different leverage ratios associated with DST 1031. These ratios are used to satisfy exchange requirements.

Typically, a DST property loan value is around 50 percent. However, you may find some DST properties that are offered in cash. This means they are offered debt-free. The aim of this is to minimize or do away with all financing risks.

Key Takeaway

1031 exchange DST comes with a lot of benefits. From deferring your capital gain taxes to building an investment portfolio, 1031 DST has so much to offer. However, it’s important to understand the rules. Know the timeless and have your strategy ready.

The Bottom-Line

If you love investing in the real estate industry, familiarize yourself with 1031 exchange DST. From the basics, rules, to how it works—understanding these basics will help you maximize the benefits of 1031 exchange DST. The above guide contains all things 1031 exchange DST.



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