DST 101:
What You Need to Know About Delaware Statutory Trusts

A Delaware Statutory Trust (DST) is an investment in high-quality commercial properties designed to provide income and potential capital growth. DSTs qualify as replacement property for a 1031 exchange which makes them a unique way to transition from active management to passive ownership while deferring taxes.   Trusted Capital Partners’ DSTs feature stabilized assets managed by reputable national firms under long-term leases with well-known tenants including Amazon and the U.S. Federal Government. - DSTs enable individuals to own a share of premium properties that might otherwise be beyond their reach. 

DSTs are not only a unique way to transition from active to passive ownership and management, but also defer taxes that include capital gains and depreciation recovery through the 1031 exchange process.  Since they are stabilized properties with tenants already under long-term lease, they immediately provide scheduled monthly distributions of ordinary income, along with the potential for capital growth when the property is sold.  Trusted Capital Partners helps clients create diversified DST holdings to reduce risk and protect capital whether it is for just a portion or the entirety of the exchange.

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• Tax Deferrals within a 1031 Exchange 

• Passive Ownership 

• Potential Income and Capital Growth ​​​

• Diversification as a Portion or Whole of a 1031 Exchange 

A DST must demonstrate a discernably high -level of performance and selectivity to meet 1031 

exchange standards. Constructed for 10 years, the average life cycle is 5 years. They are structured with long leases and long-term financing if not all cash to prevent refinancing or a renegotiated lease. DSTs are typically new to like new properties. The result is most DSTs are QUALITY PROPERTY, with QUALITY INCOME under QUALITY MANAGEMENT. Clients often exercise the opportunity to repeat the 1031 process into new DSTs or other properties of their choosing, or transition into a REIT using a 721 exchange. 

In addition to deferring capital gains and depreciation recapture taxes when used in a 1031 exchange, under the current tax code, the DST process can be repeated until estate passage and the potential elimination of taxes depending on the size of the estate. DSTs can replace the debt associated with an exchange to prevent tax boot* caused by debt relief. And if the debt on the previous property is personal, the sponsor assumes responsibility for the debt which makes it non-recourse. Additionally, a DST can be used for just the debt, for a remnant portion, or 100% of a 1031 exchange to prevent tax boot. DST distributions are ordinary income that is tax-advantaged for additional depreciation and interest expenses.  ​​​

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• Capital Gains Tax Deferral 

• Depreciation Recapture Tax Deferral  

• Potential Perpetual Deferral Through Estate Passage  

• Personal to Non-Recourse Debt Replacement  ​​

• Tax-Advantaged Ordinary Income from Distributions

DSTs have several ways to potentially meet an investor’s unique objectives. The advantages of diversification for the protection of capital, higher-quality properties, national management, non-recourse debt replacement, immediate predictable cash flow for living and giving, and tax advantages all contribute to its utilization in the right circumstance. A DST’s ability to be integrated into estate planning while supporting current and future philanthropic giving is also a benefit that is an excellent solution for the right client.  ​

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• Diversification with Quality Properties ​​​​

• Professional Management 

• Non-Recourse Debt Replacement ​​

• Immediate Predictable Cash Flow 

• Tax Advantages  

• Estate Planning 

• Philanthropic Applications  

Trusted Capital Partners educates, assists, and simplifies our clients' transition from active ownership into a select real estate portfolio of DSTs and other 1031 eligible properties. We incorporate our clients into the strategy and construction process and provide personalized administrative support. Trusted Capital Partners excels at investments designed to preserve capital and safeguard multiple cash flow streams into estate plans.

Trusted Capital Partners' vision is fostering long-term wealth and trusted financial security for our clients. Learn more about us here. 

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• Education and Guidance 

• Simplification of the Process 

• Integrated Investment Strategy 

• Personalized Support 

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Trusted Capital Partners is not a certified or legal tax advisor and works collaboratively with clients' CPAs and legal counsel for strategic planning purposes. Current IRS Sect 1031 and other elements of the tax code are always subject to change. 

Securities Disclaimer: Investments in DSTs and energy mineral rights involve risks, including the loss of principal. These investments are not suitable for all investors. Past performance is not indicative of future results. This case study is for illustrative purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Prospective investors must be accredited and should consult with their tax and financial advisors before making any investment decisions. 

Saxony Securities is Trusted Capital Partners’ national securities broker-dealer that underwrites DST investments and provides access to 30+ national sponsors representing all major commercial and residential asset classes and other alternative options. They ensure securities compliance with the SEC and that investors are accredited and appropriately suited for their portfolios. Saxony’s strengths are their 25 years of performance and their independence from any one national sponsor, enabling Trusted Capital Partners to assemble diversified, turnkey 1031/DST portfolios that match an investor’s risk tolerance, return requirements, and overall investment objectives. 

Our clients vary greatly in terms of property holdings, net wealth, experience with 1031s, and investment experience. Whether individuals or collective property owners, business entities, or family trusts, they qualify as accredited investors and must be suitable for any of the investments recommended. As a security investment that has multiple levels of due diligence, client qualification and investment objectives are an intrinsic part of determining the risk and return preference for the portfolio. If you are interested in working with Trusted Capital Partners, reach out to us here.

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• Accredited Investors 

• Large and small number of properties held 

• Varying degrees of wealth 

• Experienced and Inexperienced in 1031 Exchanges or DSTs   

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• Single-Tenant Net Lease Properties: Commercial buildings such as distribution centers and select retail stores in essential markets with long-term leases to single, creditworthy tenants that are major corporations. ​​​

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• Residential Properties: Stabilized high-quality residential properties, including Class A Apartment, Build for Rent, and select Student Housing complexes that are professionally managed and meet the necessary investment standards. ​

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• Specialty Properties: Properties with unique characteristics, such as build to suit federal government buildings, data centers, self-storage facilities, provided they demonstrate strong performance and are managed by reputable firms. 

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If you would like a copy of our current property inventory, please complete the form on our Get Started page.