Do you have remainder equity from a real estate exchange? Are you looking to maximize its potential while saving yourself a hefty tax bill? A Delaware Statutory Trust can be the perfect vehicle for meeting your investment needs.
Why DST? It’s a business entity, through Delaware state law, that allows investors to take a fractional ownership of properties that produce consistent and predictable cash-flows.
A real estate sponsor firm acquires properties under the DST umbrella. Then the firm opens up the trust to potential investors, who can deposit their 1031 exchange proceeds, or purchase an interest in the trust directly.
Besides the tax savings, there are other advantages. Because the trust is the sole borrower, it’s easier, and less expensive to obtain financing than when a lender has to approve many different borrowers. Investors also don’t have to worry about their participation in the trust affecting personal credit ratings.
With the possibility of closing in less than three days, a DST guarantees that investors don’t miss deadlines and risk paying high taxes. They also have no closing costs and no state filing fees, allowing investors to hold onto more of their equity.
DSTs can be used for a wide range of investments and business transactions, and are a perfect place for investors to bring remainder equity. Investors share a proportionate interest in the trust and will be entitled to distributions from rental income or property sale.