Delaware Statutory Trust
What is a 1031 Exchange DST?
Delaware Statutory Trust (DST) Overview
Learn more about replacement properties in the form of Delaware Statutory Trust
A DST is a separate legal entity created as a trust under Delaware statutory law. Delaware law permits a very flexible approach to the design and operation of the entity. However, to use a DST in a Section 1031 tax-deferred exchange private placement program, it is necessary to comply with the requirements of IRS Revenue Ruling 2004-865 so that a beneficial interest in the trust is treated as a direct interest in real estate for income tax purposes.
It is also necessary to meet lender requirements, especially if the loan is to be securitized. An efficient and popular vehicle for protecting assets and structuring capital market transactions, a Delaware Statutory Trust is often the special purpose entity of choice for securitizations, liquidations, premium finance programs, life settlements, investment funds, real estate acquisitions, tenant-in-common structures, and much more. CSC Trust Company of Delaware (CSC Trust) can assist you in forming a Delaware Statutory Trust in a cost efficient and expeditious manner.
Whether you need active trust administration or a passive resident trustee solely for the purpose of meeting statutory requirements, we will partner with you at every stage to ensure the success of your transaction.
At Corcapa 1031 Advisors, we provide guidance and help investors find the best 1031 exchange replacement property to complete a successful tax-deferred exchange. Contact us and a 1031 Exchange specialist can review and help build your real estate portfolio. – (949) 722-1031.
Delaware Statutory Trusts for 1031 Exchanges
Delaware Statutory Trusts Can Be A Good Solution To Common 1031 Exchange Challenges
Delaware Statutory Trusts (1031 DST) began in 2004 with the IRS Revenue Ruling 2004-86 which detailed the best structure. Each DST is a separate legal entity and each investor receives “beneficial interests” in the DST or trust for IRS 1031 purposes.
DSTs are undivided fractional interest ownership in a trust. DSTs have low minimum investment amounts and therefore create an ability to diversify your current rental property into multiple investments in different cities, states, and asset classes such as apartments and net lease retail.
DSTs have low minimum investment amounts and therefore create an ability to diversify your current rental property into multiple investments in different cities, states, and asset classes such as apartments and net lease retail. A DST is a separate legal entity created as a trust under Delaware statutory law. Delaware law permits a very flexible approach to the design and operation of the entity. However, to use a DST in a Section 1031 tax-deferred ex- change private placement program, it is necessary to comply with the requirements of IRS Revenue Ruling 2004-865 so that a beneficial interest in the trust is treated as a direct interest in real estate for income tax purposes. It is also necessary to meet lender requirements, especially if the loan is to be securitized.
An efficient and popular vehicle for protecting assets and structuring capital market transactions, a Delaware Statutory Trust is often the special purpose entity of choice for securitizations, liquidations, premium finance programs, life settlements, investment funds, real estate acquisitions, tenant-in-common structures, and much more. CSC Trust Company of Delaware (CSC Trust) can assist you in forming a Delaware Statutory Trust in a cost efficient and expeditious manner.
Whether you need active trust administration or a passive resident trustee solely for the purpose of meeting statutory requirements, we will partner with you at every stage to ensure the success of your transaction.
How is a DST Structured?
What makes the Delaware Statutory Trust, 1031 Exchange DST, work so well for investors is having the ability to let numerous potential investors vie for the chance to purchase a beneficial interest. While at first glance this may look and sound risky, the opposite is actually true. Under this arrangement, the master tenant simply acquires the property under the Delaware Statutory Trust umbrella and allows investors to join up. This allows them to do one of two things with their money, which is either deposit standard 1031 Exchange profits into the 1031 DST or purchase an interest in 1031 DST directly. With these options investors can find themselves owning such types of property as apartment buildings, medical offices, or even large shopping malls.
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