Many real estate investors ask – what is a 1031 Exchange DST? and how can a Delaware Statutory Trust investment be used as a 1031 Exchange replacement property to defer capital gains?
A 1031 Exchange DST, or 1031 Exchange Delaware Statutory Trust, 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. Learn more about Delaware Statutory Trusts and how they are structured.
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.
Investors can select multiple 1031 Exchange DST properties as part of their 1031 exchange allowing diversification of asset classes, cities and level of needed non-recourse debt.
Lower Minimum Investments
1031 Exchange DSTs have lower minimum investments – often as low as $100,000 of equity. If you require a lower investment amount than the stated minimum, let your Corcapa 1031 representative know and we may be able to negotiate a reduction in certain circumstances.
Potentially Lower Fees Than TIC Investments
Because a 1031 Exchange DST investment does not require a special purpose LLC entity that needed to be annually maintained and paid for they can potentially have lower fees in than TIC investments.
Potentially Greater Cash Flow
The most common reason that investors select DSTs is for a potentially greater cash flow than they are currently receiving. Most DSTs have between a 4.00% – 5.50% projected cash flow based on the anticipated rental income less expenses. For example, if you invest $1,000,000 of equity into a DST with a 4.5% projected cash flow, this would provide a projected net annual income of $45,000. This could have a higher net cash flow than your current rental property. Note: with all real estate the income cannot be guaranteed because the rental income and expenses can increase or decrease unexpectedly.
Virtually all the loans within the 1031 Exchange DSTs that are approved by DAI Securities, LLC are non-recourse which means the investor does not personally guarantee them.
Easier access to financing for investors needing debt on their replacement property and potentially quicker closings.
Investors like the pre-arranged 1031 Exchange DST programs so that some of their 1031 risk is removed.
Larger Property Access
Access to Institutional Grade properties which are typically larger commercial properties that previously required significant capital to purchase.
Prospective clients can complete a quick form to receive current 1031 exchange DST properties.
Once approved, you can login anytime and view current 1031 Exchange DST properties.
1031 ADVISOR GUIDANCE
Our qualified team will provide guidance and recommendations based on your investment goals.