Exchanging Thoughts

DSTs: An Alternative 1031 Replacement Property Option

Posted by Margo McDonnell on Tue, May 26, 2020

Owners of appreciated real estate face tough decisions: (1) hold onto a property that may not be working for them anymore so they don’t have to pay the high tax liabilities associated with selling; (2) sell and pay the capital gains, 25% depreciation recapture and possibly the 3.8% Net Investment Income Tax; or (3) complete a 1031 exchange, defer the gain and reinvest all proceeds into more desirable replacement property. For those investors exchanging, they can buy traditional fee interest in property or an investment vehicle known as a Delaware Statutory Trust (DST). Regardless, all of the 1031 exchange rules and timelines remain the sale. The DST is simply a different replacement property option.

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Topics: 1031 exchanges, 1031 Replacement property, Revenue Ruling 2004-86, Delaware Statutory Trust (DST), Real Estate Investing, Appreciated Property