Two Gifts For The Price Of One: Even more valuable than wealth is time. Delaware Statutory Trust 1031 Exchanges can help investors transfer wealth, defer taxes, and create more quality time to enjoy the best things in life!
By Jason Salmon, Senior Vice President & Managing Director of Real Estate Analytics
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any people believe that the best thing about a Delaware Statutory Trust 1031 exchange is the relatively immediate benefits of the exchange. For example, a 1031 exchange into DST properties allows real estate investors to defer capital gains taxes, potentially preserve equity, and even reposition a real estate portfolio through the ability to exchange into multiple diversified* properties. However, what many people (including experienced investors) may not realize is that the real brilliance of using a DST 1031 Exchange is its ability to preserve wealth across generations while also helping investors create more free time to 8
1031 DST Digest
travel, learn new skills, or spend with their heirs... What Are The Rules Of 1031 Exchanges and How Does a DST Fit In? Before looking at how DST properties can help investors preserve wealth while also freeing up more quality time to enjoy life, each investor should be thoroughly familiar with the rules of 1031 Exchanges and how Delaware Statutory Trusts fit in. Basically, the IRS insists that five rules me bet: 1031 Exchange Rule #1: The Exchange Must Be Set Up Before A Sale Occurs.
Key Takeaway: Many people think
that a 1031 exchange is just a special account they can set up after they have transferred the proceeds from the sale of their old investment property. However, in order to defer capital gains under section 1031 of the Internal Revenue Code, an actual “exchange” must be created through a Qualified Intermediary (“QI”). Once the exchange has been created, the taxpayer enters into an Exchange Agreement with a QI for the sale of the property before it is transferred. The Exchange Agreement stipulates that the QI agrees to acquire the old investment property from the taxpayer and transfer the property to the new buyer, and acquires the replacement property for the
