Benefits and Risk Considerations of the DST
Written by Nathan Kuhn January 9, 2020
The Delaware Statutory Trust, or DST, is a popular investment choice for real estate investors interested in deferring capital gains taxes on appreciated property by using a 1031 exchange. We created the eBook — Bringing Clarity to Your 1031 Exchange — to help potential investors better understand the benefits and risks associated with DSTs.
The potential benefits are numerous, and include:
- No Management Responsibilities.
- DST sponsors are responsible for all the acquisition, financing, property and asset management functions; not the investor.
- Monthly Cash Flow Potential. Most DST investments are designed to provide cash flow on a monthly basis.
- Limited Personal Liability. Loans for DSTs are non-recourse which means they don’t impact the investor’s ability to secure future loans.
- Access to Institutional-Quality Property. DSTs offer the ability for the investor to have fractional ownership in institutional grade property or properties they would not otherwise have access to.
- Estate Planning. Beneficiaries, under current tax law, receive a step-up in basis upon the death of the investor, and DSTs also offer heirs the benefit of professional real estate management.
Some of the risks to understand and consider with Delaware Statutory Trusts include, but are not limited to:
- The amount and timing of distributions is not guaranteed and may vary.
- Investors’ capital is not guaranteed.
- Investments are generally not liquid and may have declining market values and tenant vacancies.
If you are interested in learning more about DSTs, please contact us at (224) 245-5281 or at [email protected].
In the meantime, download your eBook here to learn more about DSTs, as well as to discover our 5-step approach that we have been using for years to help investors successfully complete their 1031 Exchanges.
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Whether you're thinking about selling a property and want to better understand the 1031 exchange process and investment choices, or if you already sold your property and the proceeds are currently held at a Qualified Intermediary, we can help.
Please call us at (224) 245-5281 or schedule an introduction today.
Chicagoland 1031 Exchange proudly serves clients nationwide, including California, Illinois, Florida, Colorado, Massachusetts, and more.
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsors Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years, and reasonably expects the same for the current year) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investor’s situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Nathan Kuhn at 224-245-5281.
Chicagoland 1031 Exchange does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.
Securities offered through DAI Securities, LLC, member FINRA / SIPC. Advisory services offered through Kuhn Wealth Management, Inc. (KWM), a state registered investment advisor. Insurance offered through DAI Securities, LLC. KWM dba Chicagoland 1031 Exchange is independent of DAI Securities, LLC.
