January 20, 2015
Last week, Louis Rogers, Founder and CEO of Capital Square Realty Advisors, LLC, introduced us to Section 1031 Tax-Deferred Exchanges. This article discusses the Delaware Statutory Trust or DST as the entity of choice post-recession.
Following the 2007-2011 recession, TIC lending essentially ended; over time, lenders started making loans to DSTs structured to accomplish tax-deferral under Section 1031. DSTs are widely used today for virtually all fractionalized 1031 programs. TICs are no longer a viable structure for 1031 programs.
History of DST
DSTs were formerly known as Delaware Business Trusts and have been in use for many decades. A DST is a flexible, unincorporated entity formed under Delaware law and can be used for many purposes, including real estate ownership.
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