The Section 1031 of the Tax Law has made Delaware Statutory trusts preferred for most investors in the commercial real estate services. Being able to make money in a passive manner can benefit you in a number of ways, from the opportunity to travel more, to providing the necessary time to continue your studies, if you are a very young investor. Not dealing directly with tenants and the hassle of managing a commercial property you own can save you a lot of time and dst services are perfect to do so. We are going to provide below some advantages the Delaware Statutory Trust has for you and your business.
1. It is flexible
Regardless of the business you might be in, buying an interest in DST can be used in a large number of business transactions. Being the only body regarding the tax issues of their buyers, IRS has no power over your investments. When purchasing an interest in DST you have what is called a “beneficial interest” as an investor. However, you should be aware about the fact that you have no title over the property.
2. It is time saving
Most real estate investors loathe the fact that they must constantly keep in touch with their tenants, meet them and the whole process of managing the property. With the Delaware Statutory Trust, this is not going to happen. Third-party real estate agents and employees are going to manage your property. This is going to save you a lot of time in order to be able to mind your other business. Oftentimes, real estate investors have other business they are involved in and their properties are only another source of income.
3. The price of the initial investment can be low
Because there is a large number of investors (maximum 499) the actions can be bought even with 25.000 dollars. Bear in mind that this is a constant income that it generates for you therefore, it pays off quickly. You can renegotiate the lease, try a refinancing and you can even sell the property to other investors. It is a safe way to make money, because if the case of bankruptcy appears, you only loose the opportunity to continue with the investment in the trust.
4. Has its own set of rules
Because the Delaware Statutory Trust is falling under no IRS tax laws, it is more accessible. The entity and its investors make the set of rules. The selling and income is managed by the Trust. Investors do not need to keep their investment in an LLC and because of that, in case of bankruptcy, the IRS has no power over the personal properties of them. If you are not holding your investment in a LLC, no LLC taxes can be collected.
Therefore, there is no reason not to hold parts in a Delaware Statutory Trust. It is safe, tax free and you do not have to worry about dealing with the hassle of managing a property.