Demystifying Loan to Value (LTV) in DST 1031 Exchanges

Understanding Loan to Value (LTV) in the context of a Delaware Statutory Trust (“DST”) 1031 exchange requires consideration of the reserves, when making the right financial moves for investors. Not to worry though, this post is all about clearing the fog. When investing in a DST, the LTV is important because it indicates how much debt is paired with the equity. The higher the LTV, the more debt that is paired with the equity purchased. On the other hand, a lower LTV means an investor pairs less debt with their equity to buy the replacement property. Using a lower LTV can create boot and will generate more taxable income in the future.

Understanding LTV and Leverage

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.