1031 Exchange into Deferred Sales Trust (DST)
I’m going to start off assuming you have heard of and know what a 1031 exchange is, but are you aware of what a Deferred Sales Trust is?
Typically sellers will do a 1031 Exchange, selling one property and buying another. A simple concept to roll your proceeds into another property without paying taxes on the gain. A DST is similar; however, you buy a partial ownership of a property that is professionally managed. There are many to choose from; they can be apartment complexes, hotels, shopping centers, etc. The cap rates vary but they’re around 6%. This is the stress free way to park your cash and collect a check every month.
We’re seeing more baby boomers that are tired of managing their rental properties. With all the repairs and dealing with tenants it can feel like a full time job and be draining. Beyond the aggravation of managing your rentals, you might be at or past your depreciation 27.5 years.
I personally have 3 rental properties and manage them myself. It would be less burdensome if I have a management company but I don’t want to pay 10% management fees. I’m 48 years old so I’m still willing and able to manage them, but down the road I will certainly look to move my assets into a DST.
I have helped several clients move their money into a DST and they are happy they did so. I’m actually helping my mom in Arizona do a 1031 into a DST as she’s at the age it makes sense.
Keep in mind, I don’t get paid on 1031 Exchanges or DST’s. I’m simply looking to help people transition out of their rentals. I’ve been selling real estate here for 21 years now. If you’ve fully depreciated your rental and want to 1031 into another property, of course I can help with that too!
Feel free to contact me if you have questions. My team is ready with the experience to answer any questions and guide you through the process.
Thank you,
Chad Phillips, Broker Associate
Re/Max Gold - Roseville
916-390-1476
Chad.remaxgold@gmail.com
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