1031 DST / Delaware Statutory Trust
What is a “DST”?
DST is short for Delaware Statutory Trust, which is a legally recognized trust for the sole purpose of business. A DST does not necessarily need to be in the State of Delaware, and can also be referred to as an UBO or Unincorporated Business Trust. Delaware Statutory Trusts are private governing agreements under which property is managed, invested, administered, helped, and/or operated. Professional activities for profit are carried out by one or more trustees to benefit the trustor that has gainful interests in the property.
DST investments are commonly a replacement property for investors that are accredited, and are seeking to defer their capital gains taxes by using a 1031 tax deferred exchange, with a straight cash investment for investors looking to diversify their holdings. The DST property ownership allows a smaller investor to own a fractional interest in a quality, professionally managed commercial property.
A DST ownership option essentially offers the same risks and benefits that a large-scale investor would receive, without the management responsibilities. Each Delaware Statutory Trust property is managed by professional property managers and real estate investment managers. Large institutional investors like life insurance companies, Real Estate Investment Trusts (REITs), etc., could invest in these types of properties. With the 1031 exchange replacement option through a DST, smaller investors can invest in diverse selections of institutional quality properties. You can find DST investments throughout the United States. Properties may include office buildings, industrial properties, multi-family apartments, student housing, and self-storage, just to name a few.
- Provides a less complex structure for investors
- Provides more simple and efficient closing process
- Eliminates need for investors to provide tax returns to lenders
- Provides the ability to act quickly when issues arise
- Provides investors greater security against selfish investors
- Provides investors with lower minimum equity requirements
- Eliminates annual LLC fees to investors
- Provides investors protection against loan recourse liability
*Delaware Statutory Trusts (DSTs) must be performed by a licensed financial advisor. For more information, please visit Platinum Wealth Group.
Read more about 1031 DST here.
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