Broker Check


DST vs REIT -Get The Facts To Make The Best Decision

In this article we will do a comparison on the topic of DST vs REIT. You may have a rental property on the market and looking to do a 1031 exchange into an investment product. You may have done some research on how to defer your capital gains tax and receive monthly income. Some of the options that may have come up are the DST ( Delaware Statutory Trust) and a REIT (real estate investment trust). This decision will be a big one, and we want to help you make the best educated decision when it comes to DST vs REIT.  There are many difference between these two 1031 exchange investment alternatives. We will help breakdown some of the main differences of DST vs REIT. We could easily write a 10 page article on the topic of DST vs REIT, but we do not want to burden you of having to read a novel. You may have a scenario that is different from our clients. Each situation is different, and would be happy to talk you directly and find a solution that fits your scenario. After reading this article, and you have more questions about DST vs REIT, or general Delaware Statutory Trust questions, you can fill out the form below or call our office - 805-583-2720 and we would be happy to answer your questions. 

Differences Between DST vs REIT - The Basics

Because we could talk about this topic for hours, and a lengthy article, we want to give you the most important differences of DST vs REIT and the basics. The differences in DST vs REIT could be lengthy topic, and want to help you make the best educated decision based on your scenario, real estate, capital gains, etc. Some of the main differences between DST vs REIT are the investment pool and amount of investors that can get into these 1031 exchange securities. REITS have a maximum number of investors that are allowed to invest into the real estate investment trust. When you purchase a REIT, you are purchasing shares of ownership into a real estate property, or multiple properties. The tax implications on DST vs REIT could be dramatically different. In a REIT you are issued dividends based on the shares that are owned. You as the investor are responsible for the taxes on these dividends. In a DST you receive passive monthly income at a yield of 4.5%-6.5%. The tax treatment on the DST is taxed at ordinary income. When the properties sell in a DST portfolio, you have the option to take proceeds in cash plus the appreciation gained on the properties. Once you take constructive receipt of these funds, you are responsible for the capital gains tax. However, a DST vs REIT allows the investor to 1031 exchange the sold properties and 1031 exchange them into another DST portfolio. This allows you to continue to defer your capital gains tax. As the topic of DST vs REIT gets more in detail, you may have questions that are not answered in this article. We can help answer any questions relating to DST vs REIT or Delaware Statutory Trusts in general. Feel free to fill out the form below with your DST vs REIT questions, or call our office 805-583-2720 and we would be happy to answer the questions that you have! 

DST vs REIT When Looking At Control Of The Properties And Decision Making

When comparing a DST vs REIT, your control is limited. When talking about DST vs REIT, in a REIT you are bound by the decisions of the owner. If the owner of the REIT decides that they want to make structural changes to the investment properties, you do not have a say in the decision. If this requires that investors must abide by a cash call, you must invest more cash into the REIT. You must infuse this cash or face the penalties that are outlined in the REIT contract. Based on the DST vs REIT comparison, in a DST there has never been a cash call required for investors. Some of the largest DST sponsors have a 10% cash reserve set aside for the needs to property repairs, maintenance, or a lack in occupancy. One of the differences in DST vs REIT is the fact that a DST is a public security that is regulated by the SEC (securities and exchange commission). A REIT is typically not a public security that is overseen by the SEC. This is one of the reasons why a REIT may be considered a riskier investment. We hope to provide as much information on the topic of DST vs REIT. There are many things that we did not talk about and can help inform you directly. At Winthco Wealth Management we have a team that can help discuss your scenario and talk through the option of DST vs REIT. Our goal is to help educate you to make a sound decision that best fits your needs. If you would like to discuss your real estate scenario and discuss the options of DST vs REIT, please fill out the form below or call our office 805-583-2720. We can walk you through and weigh the option of DST vs REIT and help you get a grasp of the differences and what makes sense for you.  

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.

Have a  DST vs REIT Question?

Thank you! Oops!

DST vs REIT Team