Key Benefits of 1031 DST Exchanges
No Management Responsibilities
The DST is the single owner and agile decision maker on behalf of investors.
Access to Institutional-Quality Property
Most real estate investors can’t afford to own multi-million dollar properties. DSTs allow investors to acquire partial ownership in properties that otherwise would be out-of-reach.
Lower Minimum Investments
DSTs can accommodate much lower minimum investments, whereas 1031 exchange minimums often are $100,000.
Insurance Policy
If for some reason the investor can’t acquire the original property they identified, a secondary DST option allows them to meet the exchange deadlines and defer the capital gains tax.
Diversification
Investors can divide their investment among multiple DSTs, which may provide for a more diversified real estate portfolio across geography and property types.
Eliminate Boot
Any remaining profit on the sale of your relinquished property is considered “boot.” This remaining money becomes taxable unless you eliminate it. The excess cash (boot) can be invested in a DST to avoid incurring tax.
Limited Personal Liability
Loans are nonrecourse to the investor. The DST is the sole borrower.
Estate Planning
1031 exchange investments may be eligible for a step-up in cost basis so your heirs will not inherit capital gain liabilities, and provides them with professional real estate management versus the burden of hands-on management.
Swap Until You Drop
The DST structure allows the investor to continue to exchange real properties over and over again until the investor’s death.