The four stages any entrepreneur goes through   

The four stages any entrepreneur goes through   

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Steps to starting a small business

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Keeping your social media fans engaged – how to attract new followers

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Delaware Statutory Trust – fulfilling exchange requirements

Delaware Statutory Trusts are quite popular nowadays. These investment tools make it possible for business owners to exchange property without paying capital gains tax within a transaction that is commonly referred to as a 1031 exchange. DSTs are basically entities that can accommodate numerous investors. If you are a savvy entrepreneur, you should use a Delaware Statutory Trust as a 1031 exchange replacement property. Real estate prices are not going to improve any time soon and there is no other way to avoid paying capital gains.

 

1031 exchange requirements

Finding a DST property

Delaware Statutory Trusts present many opportunities to business owners who are looking to conduct an exchange. In addition to the fact that you enjoy access to the leading property management firms, the experience of the managers enables them to accelerate income. When it comes to DSTs & 1031 exchange, each investor has an ownership interest in the trust, which is the rightful owner of the property. The Delaware Statutory Trust has to acquire real estate. One property must be swapped for a similar one, in an effort to avoid paying capital gains tax.

Paying attention to timing

Section 1031 of the IRS Code imposes certain time frames. To be more precise, it is necessary to find a like-kind replacement property within forty-five days of selling the relinquished property. If it is impossible to find real estate in this period of time, then the exchange will not go through and it will not be possible to defer capital gains. The investor has about one hundred and eighty days to close the deal, provided that a replacement property is identified. It does not matter what caused the investor to not respect these time frames. If something should go wrong and the exchange time periods are not respected, it will be necessary to pay tax for the profit made.

Delaware Statutory Trust investing

Attention needs to be paid to the fact that a Delaware Statutory Trust is a separate legal entity that si set up for business purposes and it is treated as such. The beneficial interests in the trust are treated as direct interests. As far as the trustee is concerned, they are not allowed to renegotiate current loans, sell property, make unauthorized repairs or retain cash. An ownership of this kind offers the same benefits and risks as an investor, the only difference being that there is no management responsibility.

It is true that Delaware Statutory Trusts have their limitations, but the benefits that they bring about are considerable. Each owner enjoys a significant percentage of the profit, not to mention the fact that the replacement property can be used to diversify the investment portfolio. Investors have the opportunity to exchange into several properties. The minimum investment in DST is $100,000, which is not much. Taking into consideration that the sum is so low, just about everyone can invest in real estate. Let us not forget about the fact that it is a lot easier to obtain financing.