Investing in real estate can have many advantages. The use of leverage to increase potential returns (and accordingly risks), combined with tax benefits such as the deferral of the amortization tax and the deferral of capital gains tax through 1,031 similar exchanges, has long made real estate an attractive option for savvy investors.
The rules can be complicated, even for seasoned investors. If you are considering using an investment facility that relies on the intricacies of an IRS code - such as the Delaware Statutory Trust and 1031 Exchange - you should always consult qualified accounting and tax professionals.
This article provides details and information on the Delaware Statutory Trusts, an investment tool many investors use to help manage their tax liabilities and acquire fractional stakes in commercial real estate that would otherwise be beyond their ability.
What is Delaware's statutory trust fund - and why you should consider it
The 1031 Delaware Statutory Trust is a real estate investment tool that gives individuals access to commercial investment properties that can be much larger than what they could have acquired on their own. These properties are often of the same type and quality as those owned by large institutional investors such as pension funds, insurance companies or REITs.
DSTs offer an exchange right of 1031 for individual investors on both departure and exit, an advantage not normally available to other joint ownership structures. DST can also provide a profitable monthly income that can be fully protected against income tax.
DST is a professionally managed passive investment that covers a wide range of real estate types including:
Multi-family apartment complexes
Industrial buildings
Self-service warehouses
Medical practice and similar types of commercial real estate
The ready-made nature of DST, coupled with the minimum investment amounts available, enables investors to create personalized and diversified portfolios that can help them better manage investment risk by mitigating owner's current liabilities, offering recurring monthly income potential and offering substantial tax advantages.