DST Investments are a potential replacement property alternative for accredited investors seeking to defer their capital gains taxes through the use of a 1031 tax deferred exchange or through a straight cash investment. The DST property ownership structure allows the smaller investor to own shares of interest in large, institutional quality, professionally managed commercial property along with other investors, not as limited partners, but as individual owners within a Trust. Each owner will receive their percentage share of cash flow income, tax benefits, and appreciation, if any, of the entire property.
Each DST property asset is professionally managed by some of the most experienced investment real estate providers in the industry. It used to be that only large institutional investors such as life insurance companies, pension funds, real estate investment trusts (REITS), college endowments and foundations were able to invest in large, well located, higher credit quality tenant commercial property. Now as a viable 1031 exchange replacement option through a DST, individual investors have the ability to invest in a diversified selection of institutional quality investment property types that they otherwise could not purchase individually. Property types include multifamily apartment communities, office buildings, industrial properties, self storage, assisted living, student housing, multi-tenant retail and single tenant retail properties located throughout the nation.
DST investments currently offer the potential for net cash flow without management responsibilities. DSTs provide you the potential for annual appreciation and depreciation (tax shelter), and have minimum investments as low as $100,000, allowing some investors the benefit of diversification into several properties.
DST ownership can potentially provide investors with a steady stream of income, an added factor of diversification, and eliminate active property management duties. No more fixing toilets, trash, or dealing with difficult tenants.
Any Income comes to you in monthly direct deposits with quarterly and annual reports. From a tax perspective, the income and expense are treated just as any other rental property. In the past, most of our clients have experienced that approximately 50-70% or more of this monthly income has been protected from income tax through depreciation allowance, however, every investor’s tax situation differs, and you should consult your tax authority regarding depreciation tax protection.
By Leslie Pappas, Founder and CEO