Are you losing sleep about having the chase down tenants for rent, fixing the broken disposal, maintain the value of your property and wonder if it will provide a return down the road? If so, then you may want to explore the potential benefits of exchanging into a Delaware Statutory Trust.
A Delaware Statutory Trust (DST) is a legally recognized trust, used in a variety of transactions and structures. Its flexibility of operation and management, plus the limited liability granted to beneficial owners, have made the DST a popular vehicle for a wide array of business purposes.
DST stands for Delaware Statutory Trust. The legal definition: a separate legal entity established under a trust created for the purpose of holding, managing, administering, investing or operating a property, or for allowing business/professional properties to have multiple trustees where each owner has beneficial interest for federal tax income purposes and every owner gets an undivided fractional interest in the DST property.
In accordance with I.R.S. Revenue Ruling 2004-86, beneficial interest in a Delaware Statutory Trust may be considered “like-kind” replacement property in a Section 1031 exchange. Title to property is held by the trust as a separate legal entity for the benefit of a beneficial owner, rather than directly, affording liability protection to the owners. Interests in the DST are considered securities under federal securities law; however, they retain treatment as ownership in real estate. For exchange purposed, DSTs are 100% passive investments offered by nationally reputed real estate management companies, referred to as sponsors. Sponsors perform the initial due diligence, structure the property acquisition, maintain and lease the property, collect rent, service the mortgage and eventually sell the property. A DST may own one or more properties across diverse asset classes: multi-family residential, net leased retail, medical office portfolios; industrial property and others.
If you are an accredited investor, tired of the headaches of being the landlord, not interested in fixing one more toilet, then a DST may be a potential benefit to you. Be sure to get educated on the details and risks that may be involved for your unique situation.
For further information about DSTs, click below to schedule your no-obligation meeting or call our office at (704) 450-8352. You can also contact us by email at Douglas@PlanWithAWS.com.
