1031 Exchange alternative investment strategy, the Delaware Statutory Trust “DST”

The use of this tax deferred program is typically only available to accredited investors

Potential DST Investor Benefits

  • Capital Preservation and Appreciation
  • Tax Deferral and Ongoing Tax Benefits
  • Active to Passive Ownership
  • Enhanced Diversification and Scalability
  • Institutional Quality Investment Options
  • Pre-Arranged Nonrecourse Financing, if applicable
  • Turn Key Solution

The DST Solution

  • A Delaware Statutory Trust (DST) is a business trust under Delaware law and must comply with the requirements of the IRS Ruling 2004-86 to provide the deferral of taxes.
  • Properly managed 1031 exchange proceeds or direct investment dollars are invested in a DST and the investor receives all the applicable tax deferred benefits.
  • The investment in the DST is Passive on the part of the investors, with any net income from the asset or assets held by the trust passed through monthly.
  • The DST investors are not required to execute lender guarantees or indemnities given the purely passive relationship with the DST and the real estate.
  • The Management responsibility along with all decision-making in a DST is vested with the sponsor-affiliated trustee through a master operating net lease agreement
  • Investors have the potential to benefit from the enhanced scalability and diversification DST programs achieve.
  • The DST owns 100% of the fee interest in the real estate, and investors execute one agreement, the trust agreement for the DST.
  • In 2021, approximately $8 B of equity was invested in DST’s.
  • Minimum Investments: 1031 Exchange $100,000 and Direct Investments $25,000
  • For an interest in a DST to be treated as a direct interest in real estate for section 1031 purposes, the IRS has held that it must not be able to violate the “Seven Deadly Sins”.
  • Given these restrictions, DST’s are not designed for all property classes. They are best suited for a long-term triple net basis and can be successfully used with a master lease structure for multifamily, retail and comparable properties.

Opportunity Zone Investments

The Opportunity Zone, a Bi-Partisan Bill, was created by the Tax Cuts and Jobs Act of 2017.  The Program was designed to incentivize long term capital gains investments in disadvantaged communities nationwide.  Capital Gains investments receive incentives when directed into a Qualified Opportunity Fund (QOF) which then invests the capital into the Designated Qualified Opportunity Zone. Incentives Include:

  • Tax Deferral
  • Tax Savings (Stepped Up Basis– Tax Savings)
  • Tax Free Growth Potential

Disclaimer:
Capital Gains must be invested in a Qualified Opportunity Zone Fund within 180 days form the date of the sale or exchange that created the qualifying gain. Tax Benefits may vary depending on the length of time the asset is held for both the tax deferral, savings and forgiveness.  Consult with your tax advisors as this information is not intended to be tax advice.

Access to the Delaware Statutory Trust (DST) program and other real estate related Direct Placement Programs:

Dan Mercer Sr.
A Registered Representative with Emerson Equity LLC

Mr. Dan Mercer has been actively involved for more than four decades in the real estate capital markets industry. As a Registered Representative with Emerson Equity LLC, his focus includes an IRC Section 1031 exchange alternative strategy through a Delaware Statutory Trust (DST). A distinct legal entity created under Delaware law; it provides owners with a passive fractional ownership rather than owning an entire property.  An exchanger who is selling one property can defer taxes through ownership interest in multiple DST’s creating a diversified net income portfolio.

Additional alternative investments are available through Private Placements-Regulation D offerings where issuers deal directly with investors as they are exempt from registration requirements of the Securities Act of 1933. Traditionally these investments are historically lower in correlation to equities and bonds.

Emerson Equity LLC is:

A member of the Financial Industry Regulatory Authority ( FINRA) http://www.finra.org

A member of the Securities Investor Protection Corporation (SIPC) http://www.sipc.org

Not an offer to buy, nor a solicitation to sell securities. All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing. Any information provided is for informational purposes only

For more information on Emerson Equity, please visit FINRA’s BrokerCheck website. You can also download a copy of Emerson Equity’s Customer Relationship Summary to learn more about their role and services.

Securities through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication

Past performance is no guarantee of future results. DSTs are long-term investments with indefinite holding period and little to no opportunity for you to sell or withdraw funds and are considered illiquid investments. This Information is from sources we believe to be reliable however we cannot guarantee or represent that the information is accurate or complete. This material has been prepared for accredited investors. IRC Section 1031 is a complex tax concept; therefore, you should consult your legal or tax professional regarding the specifics of your situation. Please consult with your CPA and Attorney to determine if you and/or your investment entity qualify as an accredited investor and if an investment in real estate and Delaware Statutory Trust (DST) properties is suitable for you. “This material is not to be construed as tax or legal advice. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”)”