If you are a real estate investor, you may be considering selling one of your properties. There are many reasons why you might want to sell, such as to raise capital for a new investment, to downsize, or to simply move to a different location. Sometimes you are tired of dealing toilets, tenants and trash.
If you do decide to sell, you may want to consider using a 1031 exchange. A 1031 exchange is a tax-deferred exchange that allows you to reinvest the proceeds from the sale of one property into another property of equal or greater value.
One option for using a 1031 exchange is to exchange into a Delaware statutory trust (DST). A DST is similar to a real estate investment trust (REIT) that is structured as a trust. DSTs offer a number of benefits for investors, including:
Tax benefits: DSTs offer investors the opportunity to defer capital gains taxes on the sale of their property. This can save investors a significant amount of money.
Liquidity: DSTs are more liquid than other types of real estate investments, such as direct ownership of property. This means that investors can easily sell their interest in a DST if they need to raise cash.
Professional management: DSTs are professionally managed, which means that investors do not have to worry about the day-to-day management of the property. This can free up investors’ time to focus on other things, such as their own businesses or families.
If you are considering selling a residential real estate property, you may want to consider using a 1031 exchange to reinvest the proceeds into a Delaware statutory trust. DSTs offer a number of benefits for investors, including tax benefits, liquidity, and professional management.
Here are some additional benefits of selling residential real estate and 1031 exchanging into Delaware statutory trusts:
Diversification: By investing in a DST, you can diversify your real estate portfolio and reduce your risk.
Potential for growth: DSTs can provide the potential for growth, as the value of the underlying real estate assets can increase over time.
Income potential: DSTs can provide income in the form of distributions, which can be reinvested into other investments.
If you are interested in learning more about selling residential real estate and 1031 exchanging into Delaware statutory trusts, you should consult with a qualified tax advisor or real estate investment advisor.