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Offering Access to a 1031 Exchange

A Delaware Statutory Trust (“DST”) is a pass-through entity that may be used by investors in a 1031 Exchange for tax-deferred access to institutional-quality real estate. Unlike other 1031 Exchange options, a DST is a trust that owns 100 percent of the real estate and has up to 1,999 investors who invest the proceeds from the sale of commercial real estate through a 1031 Exchange.

 

Meeting Basic Requirements

Investors must meet these guidelines to achieve complete tax deferral through a 1031 Exchange.

  • All net sale proceeds must be reinvested in one or more “like-kind” replacement properties
  • The replacement property’s asset value must be greater than or equal to the relinquished property’s value
  • Debt requirements on the replacement property must be greater than or equal to debt from the relinquished property
  • A Qualified Intermediary must be used as part of the transaction process
A transaction authorized by Section 1031 of the Internal Revenue Code which allows an individual to defer capital gains taxes on the proceeds of a recently sold property by exchanging it for a “like-kind” property.
Any real estate held for use in a trade, business or for investing generally qualifies as a "like-kind" property. Examples include:  
  • Office buildings
  • Multifamily properties
  • Industrial warehouses
  • Retail centers
  • Hospitals
  • Hotels and motels
  • Single-family rentals
  • Easements
  • Tenancy-in-Common (TIC) interests
  • Delaware Statutory Trust (DST) interests
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    Following the Transaction Process

    A successful 1031 Exchange transaction must follow this time-sensitive process to completion.

    The 180-day Transaction Schedule

    If a replacement property is not found within the 45-day window, tax deferment may be in jeopardy. Closing on the replacement property must be the earlier of 180 calendar days from closing on the sale of the relinquished property or the tax filing due date for the year in which the relinquished property was sold, unless tax filing extension was obtained.

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    Potential Benefits of a DST

    A DST is a commercial real estate investment vehicle which seeks to provide:

    Tax Deferral

    Offers potential to defer capital gains tax on a commercial real estate property’s net sale proceeds

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    Capital Appreciation

    Offers the opportunity for capital growth in the underlying value of one or more commercial real estate properties

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    Institutional Access

    Offers fractional interest ownership in higher-quality commercial real estate than investors may be able to obtain on their own

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    Current Income

    Offers potential for steady, monthly income generated from operational cash flow*

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    Diversification

    Offers access to commercial real estate by geographic region, asset class, or ownership structure

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    Passive Investing

    Offers potential benefits of an investment in commercial real estate without property management responsibilities and voting rights

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    Tax Deferral

    Offers potential to defer capital gains tax on a commercial real estate property’s net sale proceeds

    More

    Current Income

    Offers potential for steady, monthly income generated from operational cash flow*

    More

    Capital Appreciation

    Offers the opportunity for capital growth in the underlying value of one or more commercial real estate properties

    More

    Diversification

    Offers access to commercial real estate by geographic region, asset class, or ownership structure

    More

    Institutional Access

    Offers fractional interest ownership in higher-quality commercial real estate than investors may be able to obtain on their own

    More

    Passive Investing

    Offers potential benefits of an investment in commercial real estate without property management responsibilities and voting rights

    More

    This is not intended to be tax advice. You should consult your tax professional. Tax treatment may vary from investor to investor.

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    Resource is the marketing name for Resource Real Estate, LLC, Resource Alternative Advisor, LLC, and their affiliates. Resource may distribute certain products through Resource Securities LLC, a wholly owned broker/dealer, Member FINRA/SIPC

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