A Delaware Statutory Trust (DST) exchange property has become quite the popular thing among real estate investors, business owners, and others who are looking to diversify their investment portfolios. If you have recently liquidated a real estate property and have managed to receive a large sum of money in the process, a DST exchange property can make a logical investment for a lot of reasons. A financial planning advisor can go over things in-depth, but here is a look at three of the reasons a DST 1031 exchange property makes a wise investment after you have sold other real estate.
You may defer some of the capital gain's taxes you would normally have
Deferring capital gain taxes is probably one of the biggest reasons why investors turn their money to 1031 DST exchanges after they have sold a high-dollar real estate property. If you made a major gain after a property sale, all of that money is potentially going to be taxed at the end of the year. These taxes can cost you a big chunk of your profits, so designating at least a portion of the capital earned for a DST 1031 property is a wise decision to make financially.
You get the opportunity to diversify real estate investments
The beauty of DST 1031 properties is they can be owned in part by a long list of people. You can potentially be the partial owner of several properties, which means you have a highly stable foothold in real estate properties. If you hold ownership in say ten of these properties, it is not going to hurt your investment portfolio value if one property is lost, for example. On the other hand, if you sink all of your funds into one real estate property and that one investment turns out to be a loss, your investment portfolio takes a huge hit.
You will not get into an investment that requires a lot of your time and attention
DST 1031 properties are pretty much passively held by investors; you really are not going to be responsible for things like property maintenance like you would if you just bought a whole property outright. If you liquidated a prior property for this very reason, a DST 1031 Exchange can be a really attractive investment. You can still get the opportunity to grow your wealth without actually having to put time and effort into doing so.