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1. What is a Delaware Statutory Trust (DST)?
A DST is a legal entity that allows investors to acquire fractional ownership in real estate as part of a 1031 exchange without having to replace the property sold with a like-kind replacement property.
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2. What are the primary benefits of investing in DSTs?
DSTs offer benefits such as income, property and estate tax advantages, provide a steady cash flow, diversification of your real estate portfolio, professional property management, and relief from mortgage debt and personal liability.
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3. How do DSTs provide tax advantages?
DSTs are used as part of a 1031 exchange that allow for the deferral of federal and state capital gains. DSTS also avoid the property tax revaluation inherent in most 1031 exchanges. DSTS are also an effective estate planning tool to fractionalize real estate holding while maintaining equity appreciation.
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4. How can DSTs be part of estate planning?
DSTs are a common estate planning strategy providing estates greater flexibility in allocating assets to beneficiaries as DST ownership interests can be allocated to multiple beneficiaries.
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5. How do I access cash from DSTs?
Investors in DSTs typically receive regular and consistent monthly cash distributions from the income provided by the DST.
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6. How does diversification work in DSTs?
DSTs typically own institutional grade properties, allowing providing investors with a more diversified real estate portfolio, reducing the risk compared to owning a single property.
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7. What is the role of professional management in DSTs?
DSTs are managed by experienced professionals who handle property management, maintenance, and decision-making, relieving investors of day-to-day responsibilities.
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8. Am I liable for the debt and liabilities of the DST as an investor?
No, DST investors are typically not personally liable for the debt and liabilities of the DST. One of the key advantages of investing in a DST is that it offers limited liability protection to its investors.
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9. What types of real estate properties can be held in a DST?
DSTs can hold various types of properties, including apartment complexes, commercial buildings, retail centers, and more, offering investors flexibility.
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10. What is the minimum investment required for DSTs?
The minimum investment in a DST can vary but is generally much less than purchasing an entire property individually.
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11. Are there any risks associated with investing in DSTs
Like all investments, DSTs carry risks, including potential property value fluctuations and changes in rental income. It is essential to conduct to work with reputable DST sponsors.
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12. Are DSTs suitable for all investors?
DSTs may be suitable for accredited investors and those looking for passive real estate investment options. Consult with a financial advisor to determine if DSTs align with your investment goals.
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13. How can I learn more about specific DST investment opportunities
Contact a tax or real estate advisor that can refer you to a reputable broker that works with DST sponsors.
