The Risks and Disadvantages of a 1031 Exchange – And How the DST Can Eliminate Them | Reef Point

The Risks and Disadvantages of a 1031 Exchange – And How the DST Can Eliminate Them

If you have invested in real estate in the past, you likely have also done a 1031 exchange. As you undoubtedly learned, however, 1031s have numerous risks and disadvantages. While they defer your capital gains tax liability when you sell a piece of appreciated real estate, the rules and regulations that apply to them can make them unappealing at best and downright dangerous at worst. Why? Because they often fail, leaving you with an enormous capital gains tax to pay.

Two Scenarios in Which the DST Made an Excellent Real Estate Exit Strategy | Reef Point LLC

Two Scenarios in Which the DST Made an Excellent Real Estate Exit Strategy

If you invest in real estate, you likely have heard about Deferred Sales Trusts (DSTs), the innovative, legal and proven method of selling investment real estate that allows you to defer payment of capital gains taxes while offering you almost total flexibility in your investment choices. But have you ever considered the DST as a real estate exit strategy?