What is the Minimum Investment with a 1031 DST?
Last week I had an investor call and inform me that he just sold his farm in Nebraska for $820,000, with virtually no cost basis! He is an active real-estate investor, owning multiple single-family rental houses in eastern Nebraska. He has already identified five properties he wants to 1031 Tax-Defer Exchange, but can’t find a sixth one (with the small amount left of $50,000) at this time to reach $820,000.
So the big question was “what is the minimum 1031 DST investment amount?” Normally the 1031 DST sponsors we work with set a $100,000 minimum, but I have found in special circumstances like this, some sponsors will make an exception to invest as little as $50,000… if you ask them very nicely.
This situation concerns “Boot” money… left-over cash after the sale of your property, and still with the Qualified Intermediary (QI) - that has NOT been used to purchase a replacement property. If you don’t execute a 1031 Exchange for the entire amount, the QI must pay the remaining cash to you after closing by the end of the 180-day purchase deadline period…
and it will be taxed as partial sale proceeds, and generally as a capital gain if held for more than one year.
As you can see, a 1031 Tax-Deferred DST Exchange can be a very useful, flexible, as well as smart strategy, when buying and selling investment real estate…
with the potential to produce a competitive income stream, defer taxes, and provide appreciation opportunity to build wealth.
Could a 1031 DST Exchange make sense with your specific circumstances? Deferring taxes on highly-appreciated investment property can be a long-term wealth builder. If you have any questions about 1031 Exchanges or want info on our current 1031 DST offerings, please contact me, Dave Pimper, at 1-800-727-1031 or at www.1031propertyxchange.com.