Frequently Asked Questions
Find answers to common questions about our services and investments.
A DST is a separate legal entity created as a trust under Delaware statutory law. To use a DST in a Section 1031 syndication program, it must comply with the requirements of IRS Revenue Ruling 2004-86 and must also (if the DST’s property is debt financed) meet lender requirements. To meet these requirements, each DST must:
- be a Special Purpose Entity (SPE)
- be bankruptcy remote; and
be a passive holder of real estate, with minimal trustee powers over the operation of the DST’s real estate, and no powers over the DST or its real estate at all in the hands of the DST’s beneficiaries.
The term 1031 Exchange is defined under section 1031 of the IRS Code. (1) To put it simply, this strategy allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long as another “like-kind property” is purchased with the profit gained by the sale of the first property.
In a DST transaction the investor sells their, property and place the funds with their accommodator. The investor then identifies one or more DSTs. When the investor has decided on which DST or DSTs they want to purchase they direct the accommodator to purchase the DST on their behalf.
DSTs offer potential tax advantages, diversification, professional management, and the ability to invest in institutional-grade properties.
Yes, a DST can be used as a replacement property in a 1031 exchange, allowing investors to defer capital gains taxes.
Expert DST & 1031 Professional
Seek to improve your investments with our DST and 1031 exchange solutions.
