How Real Estate Investors Can Use Delaware Statutory Trust (DST) Properties to Replace Debt in a 1031 Exchange

By Alex Madden, Vice President, Kay Properties and Investments, LLC Savvy real estate investors understand the primary reason for selling and buying real estate via 1031 exchange is to defer capital gains tax that would otherwise be due on the sale. By “exchanging” one or more pieces of property for one or more like-kind pieces of equal or great value helps the investor defer capital gains taxes. However, one of the critical requirements that must … Read More

As seen on WealthManagement.com: Real Estate DSTs — A Haven in a 1031 Tax-Change Storm?

In the face of the tax policy uncertainty, the question is how to think about current real estate investments and future investment plans. By Chay Lapin, President of Kay Properties & Investments, LLC Washington-watchers including many of us in the real estate industry are waiting to see if and how federal policymakers change the tax treatment of capital gains and 1031 like-kind exchanges this year. The capital gains tax rate affects the flow of capital … Read More

How do I use a DST to replace the debt in a 1031 Exchange

By: Dwight Kay, CEO and Founder of Kay Properties and Investments and the Kay Properties team When doing your calculation on replacement value for a 1031 Exchange, don’t leave out an important part of the equation – replacement debt. One of the basic 1031 Exchange requirements necessary to qualify for a full tax deferral on capital gains taxes from the sale of a property is to a) purchase equal or greater value in replacement properties … Read More

How to guard against the pitfalls of financing used in DSTs

By Dwight Kay, CEO of Kay Properties and Investments and the Kay Properties Team Investors going into a DST investment are often laser focused on the property they are buying. Where is their money going – perhaps it’s an apartment complex in Dallas or a portfolio of dollar stores in the Midwest? Investors often “kick the tires” so to speak looking at factors such as the location, occupancy, rental income and credit quality of the … Read More

Do DSTs work for a 1033 exchange due to eminent domain or involuntary conversion?

By Dwight Kay, CEO of Kay Properties and Investments and the Kay Properties Team Understanding the rules of a 1033 Exchange aka Involuntary Conversion DSTs provide replacement options for a property sold under eminent domain. Property owners initiating a 1031 Exchange often end up in that situation by choice after deciding to sell an investment property or business. However, a 1033 Exchange is used when the government steps in to acquire a property by exercising … Read More

The Tax Advantages of Zero Coupon DSTs

By Betty Friant, Senior Vice President, Matt McFarland, Vice President and the Kay Properties Team Investing in a Zero Coupon DST, frankly, sounds a little crazy. Why would anyone want to buy into a DST with no cash flow? The simple answer is for the tax advantages. How does a Zero Coupon DST work? In a Zero Coupon DST, all of the cash flow goes to the lender to service the debt on a property. … Read More

How To Create a Diversified DST Portfolio

By Jason Salmon, Senior Vice President and the Kay Properties & Investments Team  Diversification* is one of the basic building blocks to any investment portfolio strategy. It’s the simple concept of not wanting to put all of your eggs in one basket. Diversification across asset types helps to avoid concentration risk – and potentially a basket full of broken eggs. Diversification also has the potential to create other positives, such as achieving a potentially higher overall … Read More

Generational Assets: Leveraging DSTs to Transfer Wealth

By Jason Salmon, Senior Vice President and the Kay Properties Team at Kay Properties & Investments, LLC  Real estate has long been a popular asset used to build generational family wealth. One of the key tax advantages to passing real estate property to heirs is that those recipients benefit from a step-up in basis. That step-up is much like hitting the reset button on a property’s current market value.  That step-up in value alone can … Read More

How to Identify a 1031 Exchange with the 200% Rule

By Dwight Kay, Founder & CEO; Betty Friant, Senior Vice President and The Kay Properties Team “Is that your final answer?” You may recognize the question made famous by the popular TV game show Who Wants to Be a Millionaire? Choosing the right answer in this game gives you a shot at winning big money, while the wrong answer leaves you with nothing. Investors conducting a 1031 Exchange face a similar make or break decision … Read More