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All You May Need To Know About Delaware Statutory Trusts And 1031 Exchanges

The Delaware Statutory Trusts also known as DST are, as can be told by the name, state entities established under the state laws of the state of Delaware and as such operate as legal entities. DST is particularly established for the sake of investment in real estate market and tends to have a more keen emphasis on 1031 exchanges.

The beauty of a DST is that with it each individual shareholder actually gets to own an equitable share of the DST anyway. With the trust, it turns to hold rights in various real estate interests and with the incomes coming from these real estate interests so held by the DST, the investors will in turn receive their equal share of income from them all in proportion to their shares in the DST.

The DST operates in such a manner as to free the investor of the responsibility of taking decisions relating to the investment as it always has a trustee who is charged to oversee these on their behalf. The other important fact to consider about the DST is the fact that it is a non-taxable entity and as such the incomes and losses eared from the trust is passed to the investors.

The DST investments are considered in the IRS, in relation to the 1031 exchanges, as interests similar to direct interests in a real estate investment. This basically means that the properties held as DST properties qualify for 1031 exchanges for as long as the other requirements for the 1031 exchanges are met. For this reason we can see the DST option as being quite ideal and super an option for the investor who wishes to settle for the investment in real estate but has some constraints and fears over time and management issues with the property. Following are some of the advantages attracting a number to DST’s.

Among some of the benefits of the DST is the fact that they are getting the investors an opportunity to own a share in a securitized priority.

DST’s are as well a popular alternative for the reason that it will eliminate the need with commonly held properties which will demand for a unanimous approval. The decision making over the property held under the DST lies in the powers of the signatory trustee and as such relieving the investors of the responsibility over the property so held.

The other benefit of the DST is the fact of limited personal liability. Where there is the trust going bankrupt, the liability resting on the investors is limited to their investment in the trust and not any liability past this is legal.

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