Delaware Statutory Trusts: A Smart Solution for Real Estate Investors

Many real estate investors hold onto their properties not necessarily for income but out of fear of the tax implications of selling. Concerns about depreciation recapture, the challenge of finding a suitable property for a 1031 exchange, and the impact on Medicare premiums often deter them from making a move. Additionally, they worry about the complexity of the selling process and the potential loss of the step-up in cost basis for their heirs.

However, what if there were a way to transition into another real estate investment without the burdens of property management? 

This is where a Delaware Statutory Trust (DST) can provide a compelling alternative.

What is a Delaware Statutory Trust?

A DST is a legal entity that allows multiple investors to own fractional shares of large, institutional-grade real estate properties. These properties are often leased to major corporations, such as Amazon or national retailers, under long-term agreements, providing stable income potential without the hassle of being a landlord.

Benefits of a DST for Investors

• Eliminate Landlord Responsibilities – Enjoy the benefits of real estate ownership without the headaches of property management.
• Access High-Quality Properties – Invest in professionally managed assets with stable tenants and long-term leases.
• Preserve the Step-Up in Cost Basis – Maintain the potential tax benefits for your heirs while deferring taxes.
• Flexible Tax Deferral – Continue to defer capital gains taxes until a time that makes sense for you.
• Streamlined Process – DST investments require minimal paperwork and offer a straightforward 1031 exchange option.

For investors seeking a way to transition out of active real estate management while preserving tax advantages and income potential, a DST could be the perfect solution. Working with an experienced financial advisor can help you navigate the process and identify investment opportunities that align with your financial goals.

If you're considering a 1031 exchange but dreading the search for a replacement property, it may be time to explore Delaware Statutory Trusts as an alternative and that’s where a Wealth Advisor can expedite the process!