Frequently asked questions
What are the different ownership types of replacement properties that qualify in a 1031 like-kind exchange?
- There are a few different paths an exchanger can go down. They first need to decide if they want to be a passive owner or an active owner. If they want to be an active owner, they can look for property locally or nationally and buy that property and continue being an active landlord. If you are looking to become a more passive owner of RE while still completing a 1031 Like-Kind Exchange there are two fractional ownership structures that the IRS has approved. Tennant-in-Common (TICs) and Delaware Statutory Trusts (DSTs) are two passive, fractional ownership structures that the IRS has approved for 1031 exchanges. Please call 855-676-1031 to hear more.
How does a delaware statutory trust (DST) work?
- A Delaware Statutory Trust (DST) is a type of ownership structure that is under Delaware law. When a DST is properly structured, it will be deemed a grantor trust for federal income tax purposes and the purchaser of the fractional ownership interest in the trust will acquire an undivided share of the asset(s) held by the DST. If all the rules are followed, DSTs are approved to use in a 1031 Like-Kind Exchange.
Are the benefits of investing in a DST in a 1031 like-kind exchange similar to buying active physical real estate?
- A DST may offer potential benefits that maybe similar to owning physical property when conducting a 1031 Like-Kind Exchange. As always, it’s always best to reach out to our firm to explain your personal situation to see if a DST is right for you.
Some of the potential benefits are potential for monthly income, step up in basis at death, diversification of properties (property types and geography), institutional quality property, and hands-off management to name a few.
As in any investment there are risks and the need to be an Accredited Investor (SEC Accredited Investor Definition) so please reach out to 855-676-1031 or our firm to learn more and see if a DST could be a fit.
Are there potential risks associated with DSTs?
- Yes, as in any investment there are risks associated with it. First off, you need to be an Accredited Investor (SEC Accredited Investor Definition) because of the complex structure of DSTs. These are usually Reg D, illiquid, long term investments. Like any investment there is possibility of the investment losing money, income stream to stop or decrease, etc. As always, reach out to 855-676-1031 or our firm to see if a DST is the right fit for you. Investors should review all risks before making an investment.
Do DST replacement properties have a minimum investment typically?
- Yes, investment minimums vary for each offering, but typically they are $100,000 for 1031 investors and $25,000 for cash non-1031 investors. Minimum investment amounts are clearly disclosed on our Marketplace and the respective Offering Materials. Investment minimums are set by the offering sponsor. Please contact 855-676-1031 or our firm if you have specific questions on minimum investment amounts.
Is there a maximum investment amount per property replacement interest offering?
Maximum investments vary depending on the size of the investment and are the discretion of the offering sponsor.
For investors with more than $1 million to invest, our firm offers customized 1031 options. Please contact us at 855-676-1031 to discuss your needs.
Delaware Statutory Trust