Land Trust and Delaware Statutory Trust: 1031 Exchange Benefits

Posted by Andy Gustafson on Thu, Sep 22, 2011

Land trusts and Delaware Statutory Trusts (DST) are effective ways to hold title to real property that also offer titleholders tax deferral benefits when an interest is sold. According to a Revenue Ruling from the Internal Revenue Service (IRS), an interest in real property held by a land trust or DST is not considered a beneficial interest in a trust and therefore it is eligible for a 1031 exchange. Beneficial interest or certificates of trust are rights to an interest in corporation stock and are excluded from 1031 consideration. The IRS ruling determined that the activity did not equate to a trust relationship for federal tax reasons given the role of the taxpayer was limited to the management of the real property.

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Tags: Delaware Statutory Trust, Land Trust, 1031 exchange

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