How is DST Ownership Structured?
When used as a vehicle to own real estate, a DST holds title to 100% of the underlying property within it, while each individual investor owns a “fraction” or percentage of the DST.
This percentage is held in the form of a “beneficial interest” in the DST. Based on the amount of their beneficial interest in the DST, each investor receives a pro rata share of any income or loss of income as well as any appreciation or loss of value that is generated by the property held by the DST.
Using a DST allows multiple investors to exchange their properties for fractional ownership in high-quality real estate.
Investors also receive their pro rata share of all income tax shelters associated with the underlying property, such as interest paid on loans (when financed) and depreciation of structure(s), as well as any other qualifying expenses. However, it is important to understand that utilizing certain tax shelters may generate tax or financial consequences in the future.
Each DST may own one or more properties, and up to 499 investors may invest in a single DST. Investors do not have voting rights over the operation of property owned by a DST. Instead, a DST trustee (also known as an asset manager or sponsor) maintains 100% of the managerial duties of the asset(s) held by the DST.
Want to learn more about DSTs?
There are several reasons why accredited investors may be interested in a DST investment.
You may own a property like rental homes or commercial properties that you no longer wish to actively manage.
You may not find the property you own an attractive investment any longer but would still like to own real estate.
A DST can be used by investors in a 1031 Exchange to defer capital gains on appreciated real estate.
DSTs provide investors with the potential for stable cash flow throughout the life of their investment. Returns can fluctuate based on market conditions.
