A Delaware Statutory Trust, known as a DST, is a business trust created under Delaware law.1 On August 16, 2004, the Internal Revenue Service issued Revenue Ruling 2004-86 which permitted DSTs to qualify as replacement properties as part of a property owner’s 1031 exchange transaction.2
Our DST investments typically appeal to property owners looking for steady income and a passive approach to their real estate investments. Often times, property owners who are selling a property are faced not only with a significant tax bill, but also the added burden of locating, purchasing and managing a new property. With an investment in a DST, those property owners may still reap the potential tax benefits of a 1031 exchange while eliminating the often-cumbersome process of purchasing and owning a new property.
Due to some of the operational restrictions set forth in the DST structure, the investments tend to include buildings with long-term leases in place and/or steady and predictable cash flows. Further, DSTs may offer property owners a chance to invest in professionally managed, potentially high-quality properties.
In short, property owners in our DSTs are pooling their money to acquire property(s) that they normally could not afford on their own. If the DST investment is liquidated, the property owners have the option to pay any associated taxes or to continue their tax-deferral strategy via a direct 1031 exchange or by investing into another DST offering.
To learn more about DSTs and how RealtyClub can help with this unique 1031 Exchange solution, download our full guide.