All You May Need To Know About Delaware Statutory Trusts And 1031 Exchanges
The Delaware Statutory Trusts also known as DST are, as can be told by the name, state entities established under the state laws of the state of Delaware and as such operate as legal entities. A DST is especially established for real estate investment purposes and is more specifically targeting the 1031 exchanges.
Under this statutory trust, the investors all own a pro rata share of the DST. With the trust, it turns to hold rights in various real estate interests and with the incomes coming from these real estate interests so held by the DST, the investors will in turn receive their equal share of income from them all in proportion to their shares in the DST.
The DST operates in such a manner as to free the investor of the responsibility of taking decisions relating to the investment as it always has a trustee who is charged to oversee these on their behalf. One other important fact about the DST is that it is a non-taxable concern thus allows the profits and losses from the investment to e passed through to the investors in it.
Looking at their standing in relation to the 1031 exchanges, you will notice that there is a determination that considers the interests in DST as identical to interests in direct real estate investment. This basically means that the properties held as DST properties qualify for 1031 exchanges for as long as the other requirements for the 1031 exchanges are met. For this reason we can see the DST option as being quite ideal and super an option for the investor who wishes to settle for the investment in real estate but has some constraints and fears over time and management issues with the property. Get some of the most common benefits of the DST which make them a great alternative to many investors.
The fact that the DST properties are securitized, this means that the investor gets an opportunity to have a share to owning such kinds of securitized holdings in investments.
The other benefit of the DST is the fact that it eliminates the requirement for a unanimous approval. The decision making over the property held under the DST lies in the powers of the signatory trustee and as such relieving the investors of the responsibility over the property so held.
One more benefit of the DST’s is the element of the limits it gets to cases of liability. In case of a bankruptcy, the liability to be borne by the investors do not go past the investments in the trust.