Question 1

How long can you hold a DST?

Accepted Answer

DSTs last for 5 years on average, can be held up to 10 years.

Question 2

Are DSTs a liquid asset?

Accepted Answer

DSTs are illiquid. If you sell, you will owe the tax and likely the purchaser will look for a discount.

Question 3

How passive is a DST investor?

Accepted Answer

A DST investor is completely passive, operationally as well as financially.

Question 4

Do investors enjoy the appreciation of the fund?

Accepted Answer

Yes.

Question 5

Can I identify a piece of property I like as well as DST?

Accepted Answer

Yes.

Question 6

If I purchase a DST can I exchange back into a building?

Accepted Answer

Yes.

Question 7

1031 Exchanges are referred to as a “Like Kind Exchange.” Does that mean if I own a warehouse, my replacement property has to be another warehouse?

Accepted Answer

No, to be considered a “Like Kind Exchange,” it’s properties used as investments or in trade.

Question 8

What are the 3 rules of a 1031 Exchange?

Accepted Answer

3 property rule-Any 3 properties any dollar amount no limitations in how much you can purchase
200% rule This rule says that the taxpayer can identify any number of replacement properties, as long as the total fair market value of what investor identifies is not greater than 200% of the fair market value of what was sold as relinquished property.
95% rule The 95% rule is a rule in a 1031 exchange transaction that allows real estate investors to identify more than three replacement properties if they acquire at least 95% of the value of those properties. The total value of the properties identified must be more than 200% of the value of the relinquished property. This rule is not often used because investors need to acquire everything they identify to make it work.

FAQs

Frequently asked questions

How long can you hold a DST?

Are DSTs a liquid asset?

How passive is a DST investor?

Do investors enjoy the appreciation of the fund?

Can I identify a piece of property I like as well as DST?

If I purchase a DST can I exchange back into a building?

1031 Exchanges are referred to as a “Like Kind Exchange.” Does that mean if I own a warehouse, my replacement property has to be another warehouse?

What are the 3 rules of a 1031 Exchange?