DSTs Offer Interesting 1031 Solution
Investors who are looking for properties to complete their 1031 exchanges often ask us if there are “arm chair investments” that allow investors to own fractional shares of properties. The good news is that the IRS has blessed the Delaware Statutory Trust (DST) for use as 1031 replacement property. Investors purchase interests in the Trust, which holds title to property. Investment in the real estate is shared amongst many investors. DST properties are institutional grade commercial properties, including properties such as apartment complexes, office buildings, retail buildings, and shopping centers.
Sue Speidel, Vice President of Inland Private Capital Corporation, has authored the below article which provides a great overview of DSTs.
Understanding the Delaware Statutory Trust (DST)
Investing in a multiple-owner DST which holds real
estate may be a smart strategy to consider for cash investors, looking
for 1031 replacement property. In addition to the tax benefits of
owning real estate, and the benefit of having no hands-on property
management responsibilities, investors will be poised to do a 1031
exchange upon the profitable sale of their real estate.