DST 1031 Like-Kind-Exchange Overview
A Delaware Statutory Trust is a separate legal entity created as a trust under Delaware statutory law. Delaware law permits a very flexible approach to the design and operation of the entity; however, to use a DST in a Section 1031 tax-deferred exchange private placement program, it must comply with the requirements of IRS Revenue Ruling 2004-86 so that a beneficial interest in the trust is treated as a direct interest in real estate for income tax purposes. It is also necessary to secondary market to achieve favorable financing.
DST Structure & Advantages:
A DST MUST BE ALL OF THE FOLLOWING:
Thus, the use of a DST will generally be limited to long-term “A” credit, triple-net leased properties (a “box-in-one”), or to properties leased to an affiliate of the Sponsor who will operate the property on a triple-net-basis (a “master lease”).