DSTs are an efficient way to reinvest your 1031 proceeds. A Delaware Statutory Trust, or DST, has become a very effective tool for helping real estate investors accomplish their goals in 1031 exchanges. In fact, it is so effective that I feel my web page would be incomplete without a brief explanation of what a DST is. That being said, almost all the goals that can be accomplished with a DST can also be accomplished with other types of real estate.
This article will help you how these terms are used when planning to save taxes. When you are planning a tax-efficient exchange that will accomplish your goals, debt is often a critical piece of the puzzle. The terms “leverage” and “LTV” are used to describe amounts of debts on properties you sell or properties you buy in an exchange.
Much of the tax preparation community believes that you can’t use a 1031 exchange to save taxes on a gain from a partnership. They are wrong about this. Drake’s case presents a unique opportunity to save on taxes. He is anticipating a gain of approximately $1,000,000 from the sale of a property owned by a partnership. He should be able to shelter most of the gain using a 1031 exchange.
Brett and Angel have dreams. When we first met them, Angel said, “I have lived in the same house with Brett for more than 30 years, and I want a new kitchen.” Brett said, “I want to travel Europe before I get too old to do it.” Because they weren’t willing to sacrifice those dreams to avoid the IRS, Brett and Angel may have been our favorite case in recent memory.
Hunter and Dolores were lucky enough to have lived longer than they could run their business, and the building ended up becoming their retirement fund. They needed liquidity, so they sold. The sale of the building qualified for a 1031 exchange.
Ralph just retired and needs to sell his rental as soon as possible, but it’s barely breaking even. Ralph’s situation is unique, and while he didn’t complete an exchange – it actually ended up benefiting him.
Investing in stocks and real estate can present unique challenges. For Lynn, we balanced her desire for liquidity and for other investments against the tax consequences to come up with a solution that matched her needs.
Deb had a complicated situation with high debt. We helped her plan her exchange so she came out with extra income every year.
Taxes are often one of the biggest threats to accumulating wealth. Nathan was selling a multi million dollar, multi-family property. When a client is considering selling and the sale price has 8 digits, taxes are a big consideration.
Most preparers don’t have many clients who do exchanges. As a result, most preparers don’t have a lot of practical experience computing 1031 exchanges. Here’s a story of two exchanges that could have taken a wrong turn if they didn’t have help planning their exchange.
