Wealthstone Group | Real Estate | Delaware Statutory Trusts

A Delaware Statutory Trust (DST) offers investors a unique opportunity to own a fraction of a property or a portfolio of properties. This structure qualifies as a replacement property in a 1031 exchange, allowing investors to defer capital gains taxes by reinvesting the proceeds from the sale of one investment property into a DST. This is a passive investment route, where an investor can rely on the expertise of a professional real estate management firm, known as the Sponsor. The Sponsor is responsible for acquiring, operating, managing, and eventually exiting the investment, making all critical decisions on behalf of the DST's investors.

Diversification

DSTs allow investors to spread their investments across various locations and types of real estate, adjusting the overall risk and return profile of their holdings.

Passive Investment

Investors can benefit from the ownership of real estate without the hassle of day-to-day management, relying on a seasoned investment management firm to handle all aspects of the investment.

Institutional Quality Properties

DSTs often own properties of the same quality as those acquired by institutions such as insurance companies, pension funds, or REITs, offering investors access to premium investment opportunities.

Limited Personal Liability and Avoiding Financing Obstacles

Individual investors often face challenges when trying to finance high-priced replacement properties. DSTs offer a solution by structuring the investment so that the replacement property is owned by the DST, which also serves as the borrower for any loans. This approach helps investors overcome financing hurdles while limiting their personal liability.

Estate Planning

Heirs of the DST investor will continue to receive distributions, if any, and will receive a “step-up” in basis to avoid initial capital gains tax. DSTs eliminates the opportunity for heirs to argue over what to do with an inherited investment property since they can choose what to do with their inherited portion upon the sale of the property owned by the DST.

DSTs are designed for accredited investors seeking to utilize the 1031 exchange process to their advantage. To invest in a DST, an individual must meet specific accreditation criteria, typically involving a certain level of income or net worth. This ensures that investors have the financial sophistication and capacity to understand and bear the risks of such investments. By investing in a DST, accredited investors can defer their capital gains taxes, reposition and diversify their real estate holdings, and potentially enhance their investment portfolio's performance while managing risk more effectively.

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Delaware Statutory Trusts

Discover how Delaware Statutory Trusts (DSTs) can transform your investment strategy, offering a blend of flexibility, diversification, and passive income potential.

What is a Delaware Statutory Trust (DST)?

Benefits of Investing in a DST