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Intermediate0.5 hours14 terms

DST & 1031 Exchange: Key Terms for Passive Exits

This curated collection offers key terms that might be helpful when exploring Delaware Statutory Trusts (DSTs) and their role in 1031 exchanges. It provides a quick reference to commonly encountered concepts for investors considering a move to passive real estate ownership. Use it to clarify terminology and enhance your understanding of this specialized investment vehicle.

Term Collection

1

Real Estate Asset Class

A real estate asset class refers to a category of real estate properties grouped by their characteristics, use, and investment profile, such as residential, commercial, or industrial properties.

Beginner5-6 min
2

Institutional-Grade Assets

Institutional-grade assets are high-quality, large-scale real estate properties that attract significant investment from institutional investors like pension funds, endowments, and sovereign wealth funds due to their stable income, low risk, and strong market positions.

Intermediate5-6 min
3

Accredited Investor

An Accredited Investor is an individual or entity meeting specific SEC-defined financial thresholds or professional qualifications, enabling them to invest in private, unregistered securities and exclusive opportunities.

Intermediate14-15 min
4

1031 Exchange

A 1031 Exchange allows real estate investors to defer capital gains and depreciation recapture taxes when selling an investment property by reinvesting the proceeds into a new "like-kind" investment property within strict IRS timelines.

Advanced15-18 min
5

Real Estate Syndication

Real estate syndication is a private equity strategy where multiple investors pool capital to acquire and manage large-scale real estate assets, typically led by a sponsor (General Partner) for passive Limited Partners.

Advanced14-15 min
6

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min
7

Active Real Estate Management

Active real estate management involves direct, hands-on involvement in overseeing and optimizing investment properties to maximize performance and returns. This strategy requires significant time and effort but offers greater control and potential for value creation.

Intermediate5 min
8

Delaware Statutory Trust

A Delaware Statutory Trust (DST) is a legally recognized entity used in real estate to hold title to investment property, primarily utilized by accredited investors seeking passive income and 1031 exchange replacement property solutions.

Advanced7-9 min
9

Investment Control

Investment control in real estate refers to the degree of influence and decision-making authority an investor has over their real estate assets, operations, and investment vehicles.

Intermediate5-6 min
10

Fractional Ownership

Fractional ownership allows multiple unrelated parties to share in the ownership of a high-value asset, typically real estate, dividing costs, usage, and appreciation proportionally.

Intermediate5-6 min
11

Capital Gains Tax

Capital Gains Tax is a tax on the profit realized from the sale of a non-inventory asset, such as real estate, calculated as the difference between the selling price and the adjusted cost basis.

Intermediate13-14 min
12

Boot in a 1031 Exchange

Boot in a 1031 Exchange refers to any non-like-kind property, such as cash or debt relief, received by an investor that triggers immediate taxation on the lesser of the realized gain or the fair market value of the boot received, thereby partially negating the tax-deferred benefits of the exchange.

Advanced5 min
13

Buy-and-Hold Real Estate Investing

Buy-and-hold real estate investing is a long-term strategy focused on purchasing income-producing properties to generate rental income, benefit from appreciation, and build equity over an extended period.

Intermediate11-12 min
14

Tax Deferral

Tax deferral is the legal postponement of paying taxes on investment gains or income until a future date, allowing capital to remain invested and grow through compounding.

Intermediate13-16 min

Common Questions