DSTs are the Partial Ownership Structure of Choice
A DST permits fractional ownership in institutional-quality property, which meets “like-kind” requirements for a 1031 Exchange transaction. A DST investment takes all decision-making responsibilities out of your hands and places them into the hands of an experienced sponsor-affiliated trustee. That is a key reason why this passive investment structure is so popular among 1031 Exchange investors.
The DST is the single owner and agile decision-maker on your behalf.
You can divide your investment among multiple DSTs, which may provide for a more diversified real estate portfolio across geography and property types.
Most real estate investors can’t afford to own multi-million-dollar properties. The DST offers you fractional ownership in properties that otherwise would be out-of-reach.
Any loans on the DST property are nonrecourse to you. The DST is the sole borrower.
If for some reason you can’t acquire the original replacement property you identified for your exchange, a secondary DST option allows you to meet the exchange deadlines and defer capital gains tax.
There are few financial tasks more important for those with significant assets than estate planning, which you will likely will have upon the sale of your agricultural land. It is sensible to identify which of your heirs will inherit each asset and to ease future tax or administrative burdens whenever possible. With a proper estate plan, your heirs may continue to benefit from an investment, so it is wise to seek counsel from tax and legal professionals to obtain estate planning advice.
By investing in a DST, your heirs may receive any distributions paid from the investments. Upon the sale of the property owned by the DST, each heir can choose what to do with their inherited portion. One heir may continue to exchange the investment, while another can sell and receive cash proceeds.
Most importantly, should you pass away while owning beneficial interests in a DST, under the current tax laws, your heirs would get a “step-up” in tax basis bringing the investment up to fair market value, thereby eliminating any deferred capital gains taxes from the sale of your farm. This single benefit could potentially be worth hundreds of thousands of dollars, which is why a DST is considered an effective wealth transfer strategy.
Selling your family farm is big decision. Many farms have been part of a family's history for generations and letting go of the property has sentimental and financial implications. We compiled a checklist of our top tips to help farmers and ranchers, like you, navigate this new territory. It may be possible to defer taxes by reinvesting the proceeds in a like-kind investment.
Real estate investments have the potential to help generate retirement income and build long-term wealth to pass on to heirs.
A Section 1031 exchange can help you transition to another real estate investment while deferring capital gains taxes.
If you’re ready for a less stressful form of real estate ownership, consider a passive strategy.
This website is neither an offer to sell nor a solicitation of an offer to buy any security which can be made only by an offering memorandum, and sold only by broker dealers and registered investment advisors authorized to do so.
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