You might be seeing significant returns on your stocks or mutual funds. That may be pleasing, until you start to understand how much you could be paying in tax for all those gains. Luckily, options exist so that you can defer tax payments. One possibility is a Delaware statutory trust, or DST. How could such investments help you?
Better Tax Advantages
The main reason that a DST may be attractive to you is that you've earned capital gains on your investments and want to defer paying taxes on them. A so-called 1031 exchange allows you to do that. Named after the relevant part of the IRS code, a 1031 exchange grants you and other investors the right to put off capital gains tax payments if you invest in the right properties. Delaware statutory trusts fall within the appropriate requirements. When you invest in a DST, your tax situation should look better.
Experiencing a Lower Entry Threshold
A major DST will have one master investor who secures financing for the property, and that investor will then bring on dozens of smaller investors to form the trust. Because you're pooling your money with others, you won't have to buy a multi-million dollar property on your own; you'll be a proud owner of a very high-end building or development without having to go it alone.
Getting Passive Income
Like many investment properties, a DST allows you to simply contribute money and reap the benefits of co-ownership. Many DST properties have paying tenants and make a great deal of money on a day to day basis. The typical DST investment is hundreds of thousands of dollars, so the return on your money should be adequate without much active work from you. If you're already retired, this can be a big relief; you may not have energy or desire to be focused on the inner workings of a new real estate purchase.
Because you're unlikely to be the master investor on the project, you can enjoy fewer responsibilities overall. For instance, you won't have to deal with the loan lender or finding funding. You're unlikely to be needed on site to deal with maintenance or tenant issues because many DST properties are managed by professional property management teams.
Converse with financial planners knowledgeable about how DST 1031 properties could be the best investment you make this year. With more information, you may be relieved and happy to have this investment opportunity.
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