Deferred Sales Trusts (DSTs) have been in existence for years, but nevertheless remain relatively unknown today. We here at Reef Point, therefore, thought it would be a good idea to give you a brief overview of the three main pillars of a DST, namely:
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.
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?
In Part 1 of this series, we explained how you can use a bifurcated 1031 exchange and Deferred Sales Trust (DST) to meet your investment and financial goals. In Part 2, we now offer you an alternative to the bifurcation approach.