Delaware Statutory Trust Case Studies

Delaware Statutory Trust Case Studies

Case Study 1

An locally-based CPA describes the way their client sold an investment property and was required to pay a significant capital gains tax as well as depreciation recapture. There was no other option that a direct 1031 exchange to reduce taxes for the client. Capital gain and recapture depreciation tax could be substantial as the property appreciated substantially and the client had seized every opportunity to depreciate the property fully.

The CPA also stated that the client had a different property in mind that could be a suitable 1031 option, however they were unsure whether they’d be able to close the new property on time to be able to satisfy the 1031 guidelines. In reality they weren’t sure that they’d be able close the deal in the first place. The CPA was aware about a method to reduce the chance of a large tax selecting an eligible DST during settlement, and up to 45 days following the settlement. If there could be a way to lessen the uncertainty of taxation they would like to explain this option to their client. The DST will serve as a backup in the event that the replacement deal failed, and, of course, provide their client a tax savings plan.

Case Study 2

An Local estate planning lawyer is asking us whether there is an option to sell real estate and then roll the profits into something other than another property, without putting off taxes? The attorney represented a couple who had made an enormous fortune from commercial real estate. They wanted to start selling the properties since they did not want to take on the responsibilities that come with being a landlord, and also because they wanted to create an uncomplicated, securitized and unitized portfolio of assets to their children as well as their other beneficiaries. The lawyer had heard of DSTs, but wasn’t certain the process they employed and what the benefits was. He was thinking that it was better to let the property and pay taxes. Then invest elsewhere, as he advised in the past However, if DSTs could be the best option the attorney would discuss options together with the client.

The reason was that the client reached a stage in their lives in which they didn’t want the burden of handling the four T’s: Tenants Toilets, Trash, and termites. They wanted their payment to be made every month and, secondly they did not want their children to handle the real estate aspect after the death of their parents since they did not have the interest or knowledge. The couple knew that real estate could cause problems for their children and could be an issue for them to debate. They wanted to prevent conflict and let every one of their kids to decide whatever they want by dividing the inheritance. by selling the real property and then rolling the proceeds over to the DST in essence, they could transform a tangible, non-liquid, “hands-on” real property into a passive “unitized” security, which would allow them to be more flexible in gifts or estate plans.

The option of selling the property and 1031 exchange to the DST was one option they considered. They especially liked the idea that it could be invested in quality institutional real estate that was managed by professionals and would be able to be able to receive the stepped-up cost basis after their deaths, which the properties originally received. The property would also not be subject to tax on the current year.

Case Study 3

The case study involved a locally-based farmer and developercouldn’t meet on a cost for the farm’s land. The farm’s children had relocated and leaving the farming operation to the next generation wasn’t an alternative. Additionally this farm could be worth much more in the future as a development opportunity than land for farming. It was a chance that the owner could generate revenue and also for the developer to acquire an investment property. However, they were in a bind. The farmer was seeking more than what the developer was willing to have to pay since the tax on this sale could have been substantial. Once they realized that the farmer would be allowed to defer taxes, increase income and avoid any estate tax,the impasse lifted. It was a win-win situation.

Case Study 4

A very urgent phone call is received from an commercial real estate agent due to the fact that the client is within the 45-day timeframe and the property that was identified as a replacement doesn’t appear to be going to be a reality. Can anything be accomplished? Yes, it is possible. Two DSTs have been identified to be replacement property. As is usually the case with these cases the deal is accepted however, there’s an issue. If the deal hadn’t completed, 100% of the proceeds could be put to the DST solution, and taxes could be avoided. In this instance, the new property was bought for less than the one that was surrendered. It still left a large portion of taxes that could be due. The good news is that the cost difference could be put towards an DST or a set of DSTs to get rid of the current tax burden. This particular commercial real estate agent has made it a routine to ensure that they include the backup DST whenever they plan to make a 1031 swap. It’s tax-saving and draws many more clients.

Case Study 5

commercial broker who is specialized with succession plans has a customer selling a company. A large part of the value of the company is derived from appreciation of real estate, which is not part within the context of business. The client is insistent that they sell the real estate with the business as they don’t wish to take on the risk of tenant risk. Furthermore, her client realizes that they are able to organize the transaction for maximize their tax benefits when they have some flexibility in the division of the sale price to the property and worth of the company. The DST allows for this flexibility.

Case Study 6

realtor who is a residential agent is working with a customer who is selling the property as a vacation rental since the client has stopped using the service and is interested in knowing what it is a DST is sensible? After doing their maths, they see that the DST gives them significantly more revenue.

Tax & Law Research Inc. Management

We have been registered as investment advisers, and as such , we don’t accept commissions. Since DSTs are securities, and are only accessible to investors with a valid license The agent selling the DST must be licensed as a securities broker. Our company has created an advisory practice within the DST area. Our charges are upfront, clear and only paid if the transaction succeeds. After the transaction is completed and we are able to waive all of the commission that normally belongs to the agent selling. Our clients will save significant costs and enjoy a greater beneficial interest. Since we are fiduciaries, we are not obligated to guide our clients into higher commission vehicles. Since we’re transparent as well as only working with best DST sponsors in the nation We believe that our proposition of value is appealing to the clients we serve. They can see the whole picture and know that we are on the same table with them.

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We will collaborate closely with you, just as we work with our other clients to find the most effective way to manage your 1031 Exchange. Contact us now.


This document has been created for informational purposes only . It does not intend to offer any, and should not be taken as tax or accounting, legal or other advice. It is recommended to consult your own tax accountant, legal and tax experts prior to making any purchase.

The information herein is not an offering to buy securities.


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