Introducing the Revolutionary Delaware Statutory Trust (DST) – Unlocking Limitless Possibilities for Investors
Experience a groundbreaking investment opportunity with a DST, where investors hold a pro rata interest in the trust and enjoy the right to receive distributions from rental income or the eventual sale of the property. Unlike traditional ownership, investors do not hold deeded title to the property. Instead, the trust itself holds the deed and makes all decisions regarding the property, including its sale, through the signatory trustee.
While this may initially seem disadvantageous, this unique structure actually opens up a world of significant advantages for investors. Discover the benefits of a DST that can transform your investment journey.
For those seeking a 1031 tax-deferred exchange, purchasing a beneficial interest in a DST is treated as a direct interest in real estate, satisfying the requirements of IRS Revenue Ruling 2004-86. This ruling can be relied upon by other taxpayers in defense of a 1031 exchange position, providing peace of mind and financial benefits.
But the advantages of a DST extend beyond 1031 exchanges. Even if you’re not conducting a tax-deferred exchange, a DST remains an attractive investment vehicle. Enjoy all the benefits of securitized real estate, coupled with the financial specifics of the particular DST. And because it is considered a direct interest in real estate for tax purposes, you can still conduct a 1031 tax-deferred exchange when the property is sold, ensuring a cycle of tax-deferred real estate ownership.
It’s important to note that due to legal limitations and DST financing nature, this investment vehicle is generally limited to long-term “A” credit triple-net leased properties or properties leased to an affiliate of the sponsor, who operates the property on a triple-net basis.
Delve into the rich history of DSTs, which can be traced back to 16th-century English Common Law. However, it wasn’t until the passage of the Delaware Statutory Trust Act in 1988 that statutory trusts gained legal recognition as their own entity, separate from their trustee(s). This act offered freedom from the corporate law template, allowing trustees to structure their entity in the most beneficial way for all parties involved while providing liability protection similar to that of a limited liability company or partnership.
Since the year 2000, DSTs have become increasingly popular for tax deferral, asset protection, and balance sheet advantages in real estate, securitization, and mezzanine financing. In fact, DSTs have emerged as the most common ownership structure used by smaller investors to own investment-grade real estate alongside other investors, thanks to IRS Revenue Ruling 2004-86. This ruling recognizes a beneficial interest in a DST as a “direct interest in real estate,” qualifying for a 1031 exchange, assuming all other requirements are met.
Say goodbye to the limitations of traditional ownership structures and embrace the future of investing with DSTs. Join the 90% of securitized real estate offerings brokered by Cornerstone for 1031 exchanges that are now DSTs. Unleash the potential of your investments with a DST today.