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What Is A DST 1031 Exchange?

by Amelia Jones 1031 property expert,Tax Consultant
There's a lot of hype around 1031 Exchange Delaware Statutory Trust, or DST. What does it exactly mean? Well, in a nutshell, it is an entity that is used to delay capital gains tax from the sale of rental property into a portfolio of real estate. A 1031 Exchange Delaware Statutory Trust is quite similar to a TIC or tenant in common as you can invest a fractional interest in real estate. Unlike a TIC, a DST 1031 property can qualify as a "like-kind" exchange replacement property in return for a 1031 exchange. This qualification as "like-kind" property is in accordance with the Internal Revenue Code Section 2004-86. You can use a DST 1031 Exchange entity to hold title to a wide array of properties. You must note that a typical 1031 exchange DST property is a triple net (NNN) leased retail or a multifamily apartment building or office property. A triple net leased property is a kind of property in which the tenant takes responsibility for paying property taxes, maintenance costs, and insurance.

What Are Some 1031 Exchange DST Properties?


Other kinds of DST 1031 exchange properties available to investors include multifamily apartment buildings, self-storage buildings, retail centers, or medical offices. These properties usually have long term lease contracts with the tenants. Our 1031 exchange DST portfolios give access to several properties to our qualified accredited clients, with just a minimum direct investment of $25,000.

What Is A 1031 Exchange DST In Terms Of Financing?


The non-recourse financing applied on DST 1031 exchange properties is a longterm concept (usually seven to 20 years). This greatly helps to lower 1031 exchange DST closing risk for investors who are required to identify a property within their 45-day identification period. The current loan to the cost of a DST 1031 exchange property is somewhere between 40%-65%. A DST 1031 exchange property has a 50% loan to cost in a property wherein the investors put forth 50% of the required equity or cash amount to purchase the 1031 exchange DST property, and the lender is offering the other 50%, in the form of a loan. As a DST 1031 exchange property owner, you will definitely get 100% of your pro-rata portion of any potential principal pay-down from the loan on the real estate. This allows the investor to build equity in the property.

What Do The Investors Get?


DST 1031 exchange investments guarantee 100% of the pro-rata portion of a potential net appreciation of the real estate over investment timeline. This is an aspect that distinguishes DST 1031 properties from the tenant in common projects. In a tenant in common, the sponsor of the offering is usually entitled to a portion of the potential rental income and potential appreciation of the property.  

 

Individual DST 1031 exchange investments may vary and can be quite complex. It is advisable to seek guidance from 1031 experts in a specific situation. If you are searching for a DST 1031 Exchange, call 1031 the property at 1-800-395-0046 or drop an email: info@1031property.com

 

reference: https://bit.ly/2rEbyAI

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About Amelia Jones Junior   1031 property expert,Tax Consultant

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Joined APSense since, November 5th, 2019, From Minneapolis, United States.

Created on Nov 29th 2019 00:36. Viewed 428 times.

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