How 1031 Exchange into DST works?

How a 1031 Exchange Investment Works

The properties can be used both as a business or a real estate investment that is exchanged under 1031 exchange. Capital gain taxes can be deferred On the sale of commercial property under the 1031 exchange investment of the investor. To avoid the capital gain taxes, the investor has to sell the property and reinvest the proceeds to buy property of equal or greater value and a like-kind property. The taxpayer has to identify the property within 45 days and has acquired the property within 180 days to defer capital gain taxes.

There are eight steps or processes involved in the completion of the 1031 exchange, Although in real estate, 1031 exchange is commonly used. For an investor, a professional typically completes the step of the 1031 exchange as it is a complicated process. We will discuss the types of professionals to rely on during a 1031 like-kind exchange in the section below.

The 8 steps involved in the 1031 exchange investment process areas:

1. Selling the investment property is the first step
2. Qualified Intermediary is liable for capital gain
3. Within 45days one has to identify the like-kind property
4. Qualified Intermediary is to get the duty letter
5. Seller of the 1031 exchange property s negotiated
6. Sales price is agreed
7. Capital has to be transferred by our Intermediary to the titleholder or the title company
8. IRS form has to be filled out

What Are Some 1031 Exchange DST Properties?

The investor can do 1031 exchange into DST for various properties. The properties that are available for investors include multifamily apartment buildings, retail centers, medical offices, or self-storage buildings. DST allows the investor to have long term lease contracts with the tenants. With our 1031 exchange portfolios, there are multiple properties available for our accredited clients, with minimum investment as low as $25,000.

DST 1031 exchange has multiple financing ratios to meet the investor's exchange terms of taking on "greater or equal debts," as defined by the Internal Revenue Code section 1031. However, some DST 1031 exchange properties offer debt-free, all-cash to reduce the risk of using financing when buying properties. The financing used on DST 1031 properties is typically non-resource to the investor. Non-recourse financing generally is as financing whereby the lender's only treatment in the case of non-payment is the subject property itself. The lender is not able to seek the investor's other equities beyond the subject property. So, investors could lose the complete principal amount invested in the property in the case of a major tenant bankruptcy, market-wise recession, or depression, but their other assets would understand about 1031 exchange into DST.