The Complete Guide to 1031 Exchanges and Delaware Statutory Trusts (DSTs)
How Investment Property Owners Can Preserve Wealth and Defer Capital Gains Taxes
Presented by Work First LLC
DBA Work First Cash for Homes
Welcome
If you're thinking about selling an investment property, you may be wondering:
- How can I reduce or defer capital gains taxes?
- Is a 1031 Exchange right for me?
- What is a Delaware Statutory Trust (DST)?
- What are my options if I no longer want to be a landlord?
At Work First LLC, we believe that informed investors make better financial decisions. Our goal is to educate property owners about available strategies and connect them with experienced professionals who can help determine which option is appropriate for their situation.
We do not provide tax or legal advice. Instead, we help clients understand their options and connect them with qualified 1031 exchange accommodators, tax advisors, attorneys, and DST professionals when appropriate.
What Is a 1031 Exchange?
A 1031 Exchange, named after Section 1031 of the Internal Revenue Code, allows many investment property owners to defer capital gains taxes when selling one investment property and purchasing another qualifying investment property.
Instead of paying taxes immediately after the sale, qualified investors may reinvest the proceeds into another property while meeting specific IRS requirements.
Potential Benefits
- Defer capital gains taxes
- Preserve more investment capital
- Continue building wealth
- Upgrade into larger or more desirable properties
- Consolidate or diversify investments
What Is a Delaware Statutory Trust (DST)?
A Delaware Statutory Trust (DST) is a legal ownership structure that allows multiple investors to own fractional interests in institutional-quality real estate.
For many investors completing a 1031 Exchange, a DST can serve as replacement property while eliminating many of the responsibilities of active property management.
Instead of owning and managing an apartment building yourself, you own an interest in a professionally managed property.
Why Some Investors Consider a DST
Investors often choose a DST because they want to:
- Stop dealing with tenants
- Eliminate maintenance headaches
- Diversify into multiple properties
- Potentially receive passive income
- Continue deferring capital gains through a 1031 Exchange
Every investor's goals are different, which is why professional tax and financial guidance is essential.
Is a DST Right for Everyone?
No.
DSTs have advantages and disadvantages.
They may be appropriate for investors seeking passive ownership, but they also involve limitations, including reduced control over the property and investment risks.
That's why
Work First LLC encourages every client to speak with qualified professionals before making any investment decision.
How Work First LLC Can Help
If you're considering selling investment property, our team can help you understand the available strategies before you make a decision.
We can connect you with experienced professionals who specialize in:
- 1031 Exchanges
- Delaware Statutory Trusts
- Qualified Intermediaries
- Tax Planning
- Investment Property Sales
- Real Estate Attorneys
- Financial Professionals
Our role is to help you ask the right questions and connect with the right experts.
Frequently Asked Questions
Can I live in a property I purchase through a 1031 Exchange?
Generally, no. The replacement property must meet IRS requirements for investment or business use.
Do I have to buy another apartment building?
No. Depending on IRS rules, many different types of investment real estate may qualify.
Are Delaware Statutory Trusts IRS approved?
DSTs are recognized under IRS guidance as eligible replacement property for many 1031 Exchanges when structured properly.
Does Work First LLC sell DST investments?
No.
Work First LLC provides education and introductions to qualified professionals who can explain available investment options.
Ready to Explore Your Options?
Every investment property owner has unique financial goals.
Before selling your rental property, apartment building, commercial property, or other investment real estate, learn about the strategies that may help preserve more of your wealth.
Contact Work First LLC to begin the conversation. We'll help connect you with experienced professionals who can explain the options available for your specific situation.
