Are you thinking of selling your multifamily property and do not want to pay capital gains tax? DSTs are passive real estate investments run by professionals who manage property acquisitions and day-to-day operations. They often contain relatively low minimums, making them accessible to many real estate investors.
Investor Fundamentals
Thinking of selling your multifamily property, but unsure of your tax exposure? The more you understand the ins and outs of capital gains and ordinary income, the better prepared you are to lessen your potential tax hit.
If you’ve been thinking about engaging in a 1031 exchange, a Delaware Statutory Trust (DST) can be an excellent option. However, before getting involved, it’s important to understand the ins and outs of how they work. In particular, “7 Deadly Sins” must be avoided. Otherwise, the DST will fail to meet the “like-kind” requirements established by the IRS.
Even before Covid-19-related hurdles, normal tenant troubles, property maintenance, leasing agents, and property managers make for a headache and a hassle. Direct real estate ownership is not a passive endeavor, and it is not for everyone.
While transitioning from a liquidating DST to a replacement DST is a widely popular approach for investors, this type of transaction still requires the steady hand of an experienced team of professionals to help ensure your reinvestment goes smoothly.
Real estate is supposed to be a great inflation hedge, and it can be, so long as cash flow from rentals can increase fast enough to keep up with cap rate compression.