{"id":487,"date":"2023-10-06T17:13:53","date_gmt":"2023-10-06T17:13:53","guid":{"rendered":"https:\/\/royalinkprojects.com\/cai\/?page_id=487"},"modified":"2025-06-26T04:44:18","modified_gmt":"2025-06-26T11:44:18","slug":"dst-7-deadly-sins","status":"publish","type":"page","link":"https:\/\/royalinkprojects.com\/cai\/dst-7-deadly-sins\/","title":{"rendered":"DST 7 Deadly Sins"},"content":{"rendered":"\n<div class=\"wp-block-group fullWidth text-center mb-4 mb-lg-5\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n<h1 class=\"wp-block-heading red title title-xxl fw-900 mb-0\">DST 7 DEADLY SINS<\/h1>\n<\/div><\/div>\n\n\n\n<p class=\"title-xs text-center\">The Delaware Statutory Trust (DST) is a formal legal structure recognized by the IRS to take advantage of 1031 property exchanges.&nbsp; To maintain its IRS-granted status, the Trustee who manages the DST must avoid the following:<\/p>\n\n\n\n<ul class=\"wp-block-list sins-list mb-4 mb-md-5 text-black\">\n<li>The Trustee of a DST is not allowed to request, require, or permit future equity contributions, either by current or new beneficiaries once the offering is closed.\n<ul class=\"wp-block-list\">\n<li>This \u201cSin\u201d prevents capital calls from current owners or creating a new offering for capital on the same property because it could dilute your ownership of the DST.<\/li>\n\n\n\n<li>Note, that should a current owner of the DST die, ownership assets may be passed to new beneficiaries without a dilution of ownership to other DST owners.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to borrow new funds or renegotiate the terms of the existing loan once the offering is closed.\n<ul class=\"wp-block-list\">\n<li>Even though a loan on a DST property is non-recourse (which means the DST owner has no liability for the loan), changing existing or adding more debt on a property could negatively affect investment returns.<\/li>\n\n\n\n<li>It also means that once a loan is in effect and the DST begins collecting investments, changing the debt could impact an investor\u2019s IRS-required debt replacement amount for their 1031 exchange.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to retain or reinvest any sales proceeds from the sale of a DST.\n<ul class=\"wp-block-list\">\n<li>All proceeds must be distributed back to the owners of the DST.&nbsp; Individuals may elect to roll all proceeds over to a new DST or other 1031 exchange, roll over a portion of the proceeds, or cash out.&nbsp; DST owners are encouraged to consult professionals to determine the tax consequences of each decision.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to make major capital improvements to the DST property.\n<ul class=\"wp-block-list\">\n<li>However, the Trustee may make capital expenditures for normal repair and maintenance, minor non-structural improvements, and those required by law.<\/li>\n\n\n\n<li>This is ostensibly to prevent the DST from becoming an investment tool for huge capital gains which the IRS could not tax due to 1031 rules.<\/li>\n\n\n\n<li>This \u201cSin\u201d also prevents #1 above from occurring.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to speculate with any liquid cash coming into the DST.\n<ul class=\"wp-block-list\">\n<li>The Trustee may invest in short-term debt obligations as a holding tool to increase, if only in a minor amount, the value of the DST.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to withhold rents or proceeds that are allocated for distributions.\n<ul class=\"wp-block-list\">\n<li>The Trustee is allowed to keep a cash reserve for DST expenses.&nbsp; These reserves are typically set forth in the Private Placement Memorandum for disclosure purposes.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The Trustee of a DST is not allowed to renegotiate current leases or enter into new leases.\n<ul class=\"wp-block-list\">\n<li>This encourages a DST to work with creditworthy tenants on a triple net basis.<\/li>\n\n\n\n<li>The IRS allows for an exception to this rule in the case of bankruptcy or insolvency of the property tenant.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<p class=\"title-xs text-center px-lg-5\">Thus, the use of a DST will generally be limited to long-term \u201cA\u201d credit Triple-net leased properties (a \u201cbox-in-one\u201d) or properties leased to an affiliate of the Sponsor who will operate the property on a triple-net-basis (a \u201cmaster lease\u201d).<\/p>\n","protected":false},"excerpt":{"rendered":"<div class=\"wp-block-group fullWidth text-center mb-4 mb-lg-5\">\n<div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\nDST 7 DEADLY SINS\n<\/div>\n<\/div>\n<p>The Delaware Statutory Trust (DST) is a formal legal structure recognized by the IRS to take advantage of 1031 property exchanges.&nbsp; To maintain its IRS-granted status, the Trustee who manages the DST must avoid the following:<\/p>\n<p>The Trustee of a DST is not allowed to &#8230;<a class=\"moretag\" href=\"https:\/\/royalinkprojects.com\/cai\/dst-7-deadly-sins\/\">Read More ><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-487","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/pages\/487","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/comments?post=487"}],"version-history":[{"count":20,"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/pages\/487\/revisions"}],"predecessor-version":[{"id":2356,"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/pages\/487\/revisions\/2356"}],"wp:attachment":[{"href":"https:\/\/royalinkprojects.com\/cai\/wp-json\/wp\/v2\/media?parent=487"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}