There are a number of potential benefits associated with exchanging into a Delaware Statutory Trust (DST) 1031 property.
However, it is important to note that these potential benefits should also always be carefully weighed with the potential risks that are possible with DST investments, and as with all real estate investments, investors should consult their tax attorney and or Certified Public Account before investing in DSTs.
Still, DSTs continue to grow in popularity, especially among aging baby boomers who are tired of managing their own properties and are looking for a way to transition into a passive income stream. DST investments not only provide investors the potential for passive income but also the following six benefits as well.
1. Tax Deferral Using the 1031 Exchange
Many real estate investors have wanted to sell their rentals and commercial properties for years but haven’t been able to find a property to exchange into and just can’t stomach the tax bill after adding up federal capital gains tax, state capital gains tax, depreciation recapture tax, and the Medicare surtax. The DST 1031 property solution provides investors the ability to move from an active to a passive role of real estate ownership on a tax-deferred basis.
2. Eliminating the Headaches of Property Management
Because many DST investors are at or near retirement, they are simply tired of the hassles that real estate ownership and management often bring. They are tired of the tenants, toilets, and trash and want to move away from actively managing properties. The DST 1031 property provides a passive ownership structure, allowing them to enjoy retirement, grandkids, travel, and leisure, as well as to focus on other things that they are more passionate about instead of property management headaches.
3. Increased Cash Flow Potential
Many investors are receiving a lower amount of cash flow on their current properties than they could be due to…