DST
Frequently Asked Questions about Delaware Statutory Trust (DST)
What is a Delaware Statutory Trust (DST)?
A DST is a distinct legal entity that allows multiple investors to pool capital and acquire fractional interests in institutional-quality real estate, often used in 1031 exchanges to defer capital gains taxes.
How does a DST help with a 1031 exchange?
It enables investors to reinvest 1031 proceeds into passive real estate without direct property management, while deferring capital gains taxes.
What are the benefits of investing in a DST?
Benefits include tax deferral, access to institutional assets, passive income potential, and no property management responsibilities.
What are the IRS “Seven Deadly Sins” for DSTs?
They are IRS-imposed restrictions (per Revenue Ruling 2004-86) that limit changes to financing, capital expenditures, and management to preserve 1031 exchange eligibility.
Is a DST a liquid investment?
No. DSTs are generally illiquid; exiting requires finding a buyer for your interest, which may take time or require a discount.
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