WHAT IS A 1031 EXCHANGE?
WHAT IS A DELAWARE STATUTORY TRUST?
A 1031 Like-Kind Exchange allows an investor or business owner to sell an investment property and replace it with another property (passive or active ownership) of equal or greater value within a time-frame of 180 days from the date of close using a qualified intermediary. If all the criteria are met the investor can defer taxes on up to 100% of capital gains created from the sale of the original property. Some form of 1031 Like-Kind exchanges has been around since 1921.
A Delaware Statutory Trust (DST) is a separate legal entity formed as a trust under Delaware law. If properly structured, the DST will be classified as a grantor trust for federal income tax purposes and, as a result, the purchaser of a beneficial interest in the trust will acquire an undivided interest in the asset(s) held by the DST. DSTs may qualify for 1031 exchanges.
STEPS TOWARDS COMPLETING AN EXCHANGE
The path toward successful 1031 exchanges includes incorporating and understanding several key steps:
Consult early on with 1031-familiar real estate professionals to help with your sale and finding replacement property/properties.
Engage an experienced Qualified Intermediary (we can make a referral) to handle the transaction.
Confirm the Qualified Intermediary can securely protect your exchange proceeds during the period between your exchange sale and replacement property purchase.
Align with professionals specializing in the DST marketplace who have ready access to a selection of pre-screened DSTs vetted by a thorough due-diligence process.
Expect strong coordination and frequent updates from your 1031 exchange team.
Start searching for Replacement Property as early as your schedule allows to avoid rushes and deadline crunches.
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