June 9, 2015
Question 1: What is the entity of choice for Section 1031 exchange programs post 2007-2011 recession?
Starting in late 2007, TIC lending essentially ended. Later, as the recession began to wind down, lenders started making loans to Delaware Statutory Trusts, or DSTs, structured to accomplish tax-deferral under Section 1031. DSTs are widely used today for virtually all fractionalized Section 1031 exchange programs; TICs are no longer a viable structure for 1031 programs.
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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