There are many options to consider when engaging in a 1031 exchange of real estate. In this article, we are going to talk about Delaware Statutory Trusts and how they can be utilized to your benefit in a 1031 exchange.
What is a Delaware Statutory Trust?
A Delaware Statutory Trust is a way of owning real estate. In a DST, there is a trustee appointed who is the figurehead owner of the property. The people who have invested in the trust (the beneficial owners) are not deemed to be owners of a trust for tax purposes. Rather, they are seen as owners of the assets within the trust. That means Delaware Statutory Trusts may be eligible for 1031 exchange.
Delaware Statutory Trusts & 1031 Exchanges
A Delaware Statutory Trust is a method for purchasing replacement property in a 1031 exchange. Here are some of the advantages of exchanging into a Delaware Statutory Trust:
Passive Ownership – Not Management Intensive
Portfolio Diversification
Non-Recourse Debt (Typically)
If you decide to exchange into a DST, it’s a good idea to use the 200% rule, rather than the 3 property rule. Otherwise, the amount of properties in the Delaware Statutory Trust may exceed the requirements of the 3 property rule.
Delaware Statutory Trust Qualified Intermediaries
It’s important to work with a qualified intermediary if you are considering a 1031 exchange of real estate. An intermediary is your go-to resource for all things related to your exchange. They can prepare all of your required documents, answer all of your questions, and help you find suitable replacement property. At CPEC1031, LLC, our intermediaries have more than two decades of experience helping clients with their like-kind exchanges. Contact us today at our Twin Cities office to learn more about 1031 exchanges and how we can help!
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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