Need Cash? DST Should Not be the Option

Our prospective 1031 Exchange / DST clients come to us with all sorts of goals. For some folks, it is retiring. For others, it is a desire to stop managing property.  

Yet for some - it’s more simple: they need Cash.  

Needing cash for another property, business investment, or personal goal?  Selling an investment property seems to make sense.  However, many forget about the tax bill.  Seeking tax deferral, they often show up at our door looking for a solution.  

Very often DST isn’t it.  Instead, a cash-out refinance might be the better move.  

You cannot remove cash from a 1031 exchange without incurring a taxable event. This cash removed from the exchange is known as “boot”. Think about what 1031 exchange / DST is for.  It’s for a life change, it’s a tax deferral tool, and it’s a planning tool.  If your goal is short term cash, cash-out refinance of your current property may be a better move.  If you are already selling your property and need some cash from the sale, then a combo strategy might make sense. But let’s talk DST when your goals align with the solution. 

Best,

Josh