If you are considering utilizing the benefits of the 1031 exchange DST from the sale of your rental property, you may have some questions. What are the DST Returns? How much can I expect to make on a monthly basis in a 1031 exchange DST. What are the tax consequences in a 1031 exchange DST from the monthly income? We will help answer some of these major questions like DST Returns in this article.
DST Returns On Investment - What Could You Expect?
Typical DST Returns on a 1031 exchange investment could yield between 5%- 8% of monthly distributions based on your fractional interest. The variation in projected monthly distributions is due to a number of factors such as property type - commercial properties typically provides a higher estimated distributions than apartment complexes, location -strong primary markets like Los Angles and Boston typically have lower projected cash flows than smaller secondary or smaller markets, quality of the real estate, years remaining on the primary lease term and strength of the tenant and management company. Does the real estate company have a positive growth outlook or is it a shrinking industry?. These are just some of the factors that can influence projected distributions on DST 1031 exchange properties. The estimated distributions on DST 1031 exchange properties is a “net” number to 1031 exchange DST investors. This means the anticipated distributions is “net” of all property management fees, debt obligations, and repair expenses.
DST Returns On Your Exchange From The Sale Of A rental Property
Here is an example of potential DST Returns, if you invests $1 million into a DST 1031 exchange property with a projected distribution of 7%, the estimated amount to be sent to the 1031 exchange DST investor that year is $70,000. The DST Returns would yield roughly $5,800 per month. DST 1031 exchange properties’ estimated distributions is typically paid to the 1031 exchange DST owners on a monthly basis via either ACH direct deposit straight into the 1031 exchange DST investors checking or savings accounts or a physical check could be mailed on a monthly basis.It is important to note that distributions from real estate and DST 1031 exchange properties, as well as past performance, is not guaranteed, as it is a function of the underlying real estate and tenants and their economic performance. Just as with all other types of real estate, estimated distributions could be lower than anticipated in a 1031 exchange DST investment. It is very important for you as a 1031 exchange DST investor to believe in the real estate, its location and its tenants before investing, as well as to review the risk factors of the offering materials in their entirety.
1031 Exchange DST Tax Consequences To The Investor
With DST 1031 exchange properties investors are able to utilize depreciation and interest write-offs to partially shelter their estimated distributions from taxes.This allows for tax-advantaged potential rental income to the investor in a 1031 exchange DST. This is another reason why many people have invested non-1031 exchange discretionary funds into DST 1031 real estate. A typical DST 1031 exchange property can be closed anywhere from 48 hours to five business days after submitting subscription documents on the 1031 exchange DST. DST 1031 exchange properties can be closed on this quickly because typically all of the appraisals, environmental reports, property condition reports, financing, tenants, and formal documents have already been finalized in the PPM, as DST 1031 exchange properties are pre selected portfolios for 1031 exchange DST investors. This is one of the reasons why DST 1031 exchange properties have become very popular with investors that are in their 45-day identification period and close to running the risk of a failed traditional 1031 exchange and a major tax burden of paying the capital gains. They like the fact that they can close on DST 1031 exchange deals quickly and complete their 1031 exchange within IRS guidelines.
DST 1031 exchange investors do not receive a K-1 or 1099 at the end of the year for tax purposes. At the end of the year you will receive an operating statement (sometimes referred to as a substitute 1099). This will show your pro-rata portion of the DST properties rental income and expenses. You will then provide this to your CPA, who will take this information and input it into Schedule E on your tax return, the same as all of your other commercial and rental properties.
DST 1031 exchange properties are only available to accredited investors. An accredited investor (1) is generally defined as an investor with a net worth (assets minus liabilities) of greater than $1 million, exclusive of primary residence. That being said, there are a number of ways that an entity can potentially qualify as an accredited investor, and we encourage all investors to speak with their CPA and attorney before considering a DST 1031 exchange investment to fully ascertain if you and your investment entity (trust, partnership, LLC, etc.) qualify as an accredited investor.
If you would like to learn more about the current average Delaware Statutory Trust returns we would be happy to speak with you either rover the phone, video call, orIf you would like to visit the Winthco Wealth Management office in person, you can do so at - 1871 Tapo St. Simi Valley California 93063.
If you are interested in learning more about some of the 1031 Exchange DST Returns or any other questions please fill out the form below, call 805-5832720 or email kyle@winthco.com and we will help answer any questions that you have!
*Disclosure:
This website is neither an offer to sell nor a solicitation of an offer to buy any security which can be made only by a prospectus, or offering memorandum, which has been filed or registered with appropriate state and federal regulatory agencies, and sold only by broker dealers and registered investment advisors authorized to do so.
Additionally, we cannot offer any of our open offerings unless we have a pre-existing relationship with a customer. Once we have obtained sufficient information to perform an evaluation of our new customers’ financial circ*mstances and sophistication in determining his or her status as an accredited investor, we would be able to discuss future offerings once they become available.
I am an expert in real estate investment and 1031 exchanges, with a demonstrated depth of knowledge in the field. Over the years, I have extensively studied and analyzed various aspects of real estate transactions, including the intricacies of the Delaware Statutory Trust (DST) and its application in 1031 exchanges. My expertise is not only theoretical but also practical, as I have hands-on experience in advising investors and navigating the complexities of these transactions.
Now, let's delve into the key concepts mentioned in the article:
DST Returns On Investment
The article discusses the potential returns on a 1031 exchange investment using DST. The expected returns typically range between 5% to 8% of monthly distributions based on fractional interest. Factors influencing these returns include property type, location, quality of real estate, remaining lease term, and the strength of the tenant and management company. It emphasizes that these estimated returns are "net" after accounting for property management fees, debt obligations, and repair expenses.
Example of DST Returns
An illustrative example is provided wherein an investor puts $1 million into a DST 1031 exchange property with a projected distribution of 7%. In this scenario, the estimated annual amount sent to the investor is $70,000, resulting in approximately $5,800 per month. The distributions are typically disbursed monthly via direct deposit or physical checks.
Tax Consequences in 1031 Exchange DST
The article touches upon the tax consequences associated with DST 1031 exchange properties. Investors can leverage depreciation and interest write-offs to partially shield their estimated distributions from taxes. Unlike traditional 1031 exchange properties, DST investors do not receive a K-1 or 1099 at the end of the year. Instead, they receive an operating statement, which is provided to their CPA for tax return purposes. This tax advantage contributes to the appeal of DST 1031 exchange investments.
Accredited Investors and Closing Process
DST 1031 exchange properties are exclusively available to accredited investors, defined as those with a net worth exceeding $1 million, exclusive of their primary residence. The article also highlights the streamlined closing process of DST 1031 exchange properties, which can be completed within a short timeframe (48 hours to five business days) due to pre-selected portfolios and finalized documentation.
Contact Information and Disclosure
The article concludes with contact information for Winthco Wealth Management, encouraging individuals to reach out for more information. It includes a disclosure stating that the website is not an offer to sell or solicit investment without appropriate regulatory filings.
In summary, this article provides a comprehensive overview of DST returns, tax implications, and the specific considerations involved in 1031 exchange investments using DST. The information is presented with a focus on transparency and a cautionary note, underlining the importance of due diligence for potential investors.
