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Published on: 30 Jul 2016 by bhqonline
How a Tax-deferred 1031 Exchange into a DST can help your investment portfolio when selling your property.
When you sell your real estate assets, would you want to pay taxes on your capital gains?Of course not.
However, the IRS will take 20, up to 40%, regardless of your decision.
So, if there was a re-investment strategy that allows you to defer those taxes, and useit as leverage to acquire greater wealth, would you?
Simply stated, a 1031-exchange is a section of the IRS tax code. It allows an investor, like yourself, the ability to defer all tax-liability on your capital gains, assuming youreinvest the entire gross equity of the sale into a like-kindexchange property. Although very beneficial, there are strict guidelines that must be met to complete what is a 1031 exchange; an example being a short timelines(with no extensions)to identify and close on a 1031 exchange replacement property.
An alternative investment strategy can provide a solution to the hassles of a 1031 exchange. That solution will allow you to gain ownership to investment grade Single-Tenant, Net-Leased properties.
It’s done through a Delaware Statutory Trust. This legal entity allows investors like yourself to take a fractional ownership of creditworthy tenants that produce solid cash-flows, which are consistent and predictable.
Imagine owning a property without the hassles of management, or large management-fees. In addition, visualize a monthly passive-income check with yields much higher than a savings account, CD or government bond?Most importantly, DSTs are “flexible-equity” investments because they offer small or remainder equity solutions.
DSTscan also be used as a backup property ID for your 1031 exchange. Since we can close in less than 3 days, it almost guarantees that you will not miss deadlines. Why risk paying high taxesbecause you couldn’t find or close on another investment property in time?
You now understand that a DST:
1) Can save you froma capital-gains tax
2) Provides you with high-quality replacement “properties”
3) Offers “flexible-equity”
4) Removes the hassles of management
5) Produces strong yields,delivered as monthly passive-income
6) Serves as a back-up property ID to avoid costly deadline mistakes.
In order to take advantage, first you would need to qualify for a 1031 exchange.You can find a help an investor-direct provider of DST property investments to help facilitate you through the entire process.