2A — January 22 - February 18, 2021 — M id A tlantic Real Estate Journal


M id A tlantic Real Estate Journal

M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Editor/Graphic Artist ......................................Karen Vachon Contributing Columnist .......Jason Salmon, Kay Properties Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 350 Lincoln St, Suite 1105, Hingham, MA 02043 USPS #22-358 | Vol. 33, Issue 1 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 | Fax: 781-740-2929 www.marej.com


By Jason Salmon

Generational Assets: Leveraging DSTs to Transfer Wealth eal estate has long been a popular asset used to build generational family wealth. One of the key tax advantages to passing real estate property to heirs is that those recipients benefit from a step-up in basis. That step-up is much like hitting the reset button on a property’s current market value. R That step-up in value alone can represent a huge windfall for anyone who inherits a prop- erty that has seen even modest appreciation. Consider a ma- triarch who bought an apart- ment building in the 1980s for $1 million. Thanks to careful maintenance and upkeep, along with a good location, that property is now worth $10 mil- lion. If the owner were to sell, she would face a hefty tax on the capital gain. Instead, the owner decides to put that prop- erty in her will to be inherited equally by her grandchildren. The grandchildren also inherit that step-up to the current appraised value at the time

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of their grandmother’s death, allowing them to avoid paying tax on that gain. DST ownership offers that same benefit of a step-up in ba - sis along with some additional generational benefits that oth - er ownership structures don’t. Chief among those advantages are the ability for the investor to sell their investment real es- tate and utilize 1031 exchange into DSTs to defer capital gains taxes, greater flexibility in being able to pass DST own- ership to multiple heirs, ease of transferring title and no active management responsibilities for heirs to assume. The fractional ownership of DSTs allows an owner to

easily divide shares up any which way they like. For ex- ample, an investor owns 30 units in an apartment DST and 50 units in a DST portfo- lio of Dollar General, FedEx and Amazon net lease proper- ties. The individual wants to leave the DST investments to his two grown children. He can choose to give the apartment DST to one child and the Dollar General, Fe- dex and Amazon DST to the other child, or he can divide up the shares within each DST to give some of each to both children. For investors who want to divide ownership more precisely by percentage continued on page 4A


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