Benefits Of 1031 Exchange DST For Rental Property Owners

There are a number of benefits of 1031 exchange DST. If you own a rental property and have acculturated substantial equity in the real estate and looking to defer capital gains, the benefits of 1031 exchange DST will help you out! The 1031 exchange DST property provides a passive ownership structure, allowing the investor to enjoy their time, family, travel, as well as many other things without having to deal with property management. This is just one of the benefits of 1031 exchange DST that you can take advantage of. With all the benefits 1031 exchange DST there are also risks associated, and we will cover some of the risks in this article as well. 

Benefits Of 1031 Exchange DST - Tax deferral 

Many of our clients have wanted to sell their multifamily homes, rental properties, or commercial buildings for years but haven’t been able to find like kind real estate to exchange into and do not want to pay the capital gains tax. The benefits of 1031 exchange DST products  allow investors an ability to move from an active to a passive role of real estate ownership on a tax-deferred basis. The benefits of 1031 exchange DST allow the investor the opportunity to sell their rental property and defer the capital gains tax and invest into a self managed portfolio of real estate making this just one of the benefits of 1031 exchange DST! Exchanging into an investment property can be a benefit, but there are also some risks associated with the DST. Continue reading to understand what some of these risks  may be. 

Benefits of 1031 exchange DST  - Increased cash flow potential

Many investors are receiving a lower amount of cash flow on their current rental properties than they could be, due to their properties having under-market rents, properties that have multiple vacancies and/or that are raw or vacant land sitting idle. 1031 exchange DST properties provide an opportunity for investors to potentially increase their cash flow on their real estate holdings via a tax deferred 1031 exchange DST. Often times, 1031 exchange DST  investors are selling real estate that has a substantial amount of their net worth. They want to reduce their potential risk and instead of buying more real estate. This is similar to how investors tend to reinvest dividends in their portfolio. With the typical minimum investment of $25,000, investors are still able to purchase an ownership interest in large $40 million-plus multifamily residences, $7 million-plus retail complex,or $22 million medical facility. This allows 1031 exchange DST investors access to a level of real estate that they just would not have been able to exchange into before. Increased monthly distributions are just one of the benefits of 1031 exchange DST. 

Benefits of 1031 exchange DST  - Unlocking trapped equity

For those investors that have a substantial amount of equity in raw or real estate, the benefits of 1031 exchange DST allows them the opportunity to sell, defer taxes via a 1031 exchange DST and unlock the trapped equity that they have in their real estate  Now this trapped equity is free to produce for the investor potential cash flow on a monthly basis. Ability to typically close on a  1031 exchange DST property typically within 2-4 business days of completing and required paperwork. This is one of the main benefits of 1031 exchange DST . They are able to close quickly and complete their exchanges due to the properties being a pre selected portfolio of real estate, as opposed to waiting 30, 60 or 90 days to purchase another like kind real estate. Unlocking trapped equity is another benefits of 1031 exchange DST that you can experience. 

Benefits of 1031 exchange DST  -Increased tax efficiency 

Investors that have owned their multifamily residences or real estate longer than 27.5 years and commercial real estate for longer than 39 years have fully depreciated the properties, with no more deductions to help shelter the rental income. The benefits of 1031 exchange DST have a greater amount of financing than their rental properties that have sold, those investors are creating for themselves a new basis to shelter rental income in the1031 exchange DST. We have multiple CPA's that can help with the tax efficiency from the benefits of 1031 exchange DST! Increased tax efficiency is one more benefits of 1031 exchange DST that you will see. 

With all the benefits of 1031 exchange DST, there are risks that you should be familiar with. Some of the risks associated with a 1031 exchange DST is illiquidity, long term holding period of 7-10 years, and an exit strategy that could be difficult to get out of. We have written a detailed article about the risks of a 1031 exchange DST and you can also find that on our website to get a more detailed perspective of the risks associated with this investment vehicle. 

If you are interested in learning more benefits of 1031 exchange DST- please fill out the form below, email kyle@winthco.com or call 805-583-2720 and one of our representatives will provide you more information on the benefits of 1031 exchange DST! If you would like to visit the Winthco Wealth Management office in person to discuss the benefits Delaware Statutory Trust, you can do so at - 1871 Tapo St. Simi Valley California 93063.

*Disclosure:

This website is neither an offer to sell nor a solicitation of an offer to buy any security which can be made only by a prospectus, or offering memorandum, which has been filed or registered with appropriate state and federal regulatory agencies, and sold only by broker dealers and registered investment advisors authorized to do so.

Additionally, we cannot offer any of our open offerings unless we have a pre-existing relationship with a customer.  Once we have obtained sufficient information to perform an evaluation of our new customers’ financial circumstances and sophistication in determining his or her status as an accredited investor, we would be able to discuss future offerings once they become available.