There are a few options available to taxpayers for syndicating real estate, but for many reasons, the Delaware Statutory Trust is king. In this article, we are going to discuss Delaware Statutory Trusts and why they provide the perfect vehicle for syndicating real estate.
What is a Delaware Statutory Trust?
A Delaware Statutory Trust is an entity into which syndicators put real estate. So at the top of the ownership, there's a trustee of the Delaware Statutory Trust and when investors come in and buy the beneficial interest in a Delaware Statutory Trust, those investors are deemed to have a proportionate share of the underlying real estate for tax purposes.
The Perfect Vehicle for Syndicating Real Estate
The Delaware Statutory Trust is the perfect vehicle for syndicating real estate because it qualifies for 1031 exchange. The brokerage houses that in the past said “sell your stuff, give me the money and I'll make up the difference with rapid and efficient investment” now can say “sell the property, give me the money and I'll reinvest it into a 1031 investment and manage that money for you like we manage the rest of your non-1031 investments.”
Moving Into Less Management Intensive Property
Right now, we’re seeing a strong trend to move from management intensive property into less management intensive property. People see an opportunity to sell their management intensive properties and transition to a place where they can perhaps travel and relax and not have to worry about the unexpected ownership crises that always crop up with management intensive real estate. Delaware Statutory Trusts provide a perfect vehicle for doing just that.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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