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Delaware Statutory Trust Definition

Delaware Statutory Trust Definition

| September 22, 2021
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Delaware Statutory Trust Definition - What's A DST?

The Delaware Statutory Trust Definition can be explained simply as an investment vehicle used to defer the capital gains tax from a relinquished property into a portfolio of investment properties utilizing the IRS 1031 exchange rule. There is a lot more to the Delaware Statutory Trust Definition, what is a Delaware Statutory Trust (DST), how it works, and some of the benefits of a Delaware Statutory Trust. The Delaware Statutory Trust Definition main purpose is to defer the capital gains tax when you sell a rental property. Some real estate inventors are familiar with the 1031 exchange rules that have been in place for over 100 years that were established by the IRS. The Delaware Statutory Trust (DST) is a relatively new feature of the 1031 exchange that was adopted to allow real estate investors to sell their rental property, and 1031 exchange it into an investment property. The 1031 exchange rules still apply to transaction including the 45 day identification rule, and 180 day to close rule. The Delaware Statutory Trust Definition virtually eliminates the 180 day rule because you are 1031 exchanging into an investment property that has already been purchased. You do not need to go out and find a physical replacement property, identify it in accordance with the 45 day rule, and worry about closing on the property in 180p days. The Delaware Statutory Trust Definition has some unique features and is quite intricate. In this Delaware Statutory Trust Definition post, we will help give you a better understating of what the definition of a Delaware Statutory Trust (DST) is, and how it can help you out if you are selling a rental property. 

What Is The Definition Of A Delaware Statutory Trust?

As we discussed above, the Delaware Statutory Trust Definition is deferring the capital gains tax on the sale of your real estate investment property. Why would you want to utilize a Delaware Statutory Trust, and how does the DST work? For most real estate investors, they have owned a single family residence, multifamily apartment building, commercial building, raw land, strip mall, etc and help it for many years. These investment properties may be fully depreciated and have an extremely low costs basis. This leads to large capital gains that you are subject to pay if you take the proceeds in cash. This could be a very large tax bill and the only way to defer these capital gains is to do a 1031 exchange. You may not want to manage your real estate anymore, and would like to retire. If this all resonates with you, then you might be researching the Delaware Statutory Trust Definition that might help you in your transaction and investment goals. The Delaware Statutory Trust Definition allows you to defer the capital gains tax on your relinquished property into a property that is actively managed by a Delaware Statutory Trust company. This is a huge tax savings! The Delaware Statutory Trust Definition also allows you to receive passive monthly income on the 1031 exchange property that is being managed by the DST company. The Delaware Statutory Trust Definition states that the DST provides passive monthly income on the dst investment property. You receive monthly checks as if you are still the property owner without having to actively manage the property. The distribution rates can vary based on asset classes of the dst property, economic climate, and interest rate environment. The Delaware Statutory Trust Definition also states that you can participate in the appreciation of the dst investment property.  The Delaware Statutory Trust company will hold onto its investment property for an average of 5-7 years before it is sold. If there is appreciation on the dst property that is sold, the appreciation is added to your principal investment. Based on the Delaware Statutory Trust Definition, there are a lot of benefits to utilizing the 1031 exchange DST in your transaction so you do not have to pay the capital gains tax. 

If you would like to learn more about the Delaware Statutory Trust, setup a free consultation, please click the link below to fill out the contact form, or call our office directly - 805-583-2720

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