Broker Check

1031 Frequently Asked Questions

Accredited Investor: Defined in Rule 501 of Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings. While each state may have additional accreditation requirements, individuals are generally considered to be accredited if they have a net worth exceeding $1,000,000 (excluding the value of your primary residence), or if they have income exceeding $200,000 in each of the two most recent years or a joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

Boot: Any consideration other than “like-kind” property received by the investor. Boot is subject to taxation to the extent there is capital gain. Boot can accumulate over each exchange and is retroactive back to the original relinquished property. Boot can refer to cash boot, mortgage boot and personal property. Frequently Asked Questions

Do I have to exchange 100% of my proceeds or can I keep some?
There is great flexibility here. You can exchange 100% into one property or DST, you can split it up over multiple DSTs, you can use the DST alongside purchasing a property on your own, and you can exchange only a portion of your proceeds while paying taxes on the amount you keep. We can assist in calculating the various options available.

How many replacement properties can I identify?
There are a variety of methods for identification. The most common are to either list three potential replacement properties or list 200% of your proceeds spread over multiple properties. We will work with you in determining the best method to use.

How long do I own the DST?
Most DST programs today have a maximum life of 10 years. Part of the professional management you are investing into includes the constant monitoring of the market and being mindful of the right time to sell. It is not unusual for a sponsor to initiate a sale anytime within that 10-year period. When that occurs, investors have plenty of notice. Investors then may have all the options they have today. They can complete another 1031 exchange, keep the proceeds and pay the tax, or execute a partial exchange.

Can I sell my interest?
Like any real estate this is not a liquid investment. It is meant to be long term similar to the property you are selling. That said, you do have the right to sell your DST beneficial interest before the property is sold by the Manager.

What can I expect from the Management Firms I invest with?
Investors can expect a monthly distribution based on their share of the income potential.* In addition, as professional managers, the sponsors will provide regular updates as to the status and operations of the property in the form of written reports and conference calls.

What are my out of pocket costs?
The cost of the DST organization is built into the program. There is no out of pocket fee to the investor. The only out of pocket cost incurred by the investor is the cost of the QI. Bravest Wealth Management is paid by the Sponsor and never charges the investor an additional fee.

How Do I find a "QI"?
We have long standing relationships with local and national QI firms. We can assist in referring you to the firm that may best fit your needs.

Does my Investment Representative stay involved?
We stay with you during the entire period of your ownership, assisting with and monitoring all our client’s activities and properties.

How do I report a DST on my tax return?
DST’s are passive real estate investments. They are reported in the same manner as any rental property would be reported for an individual or entity. You will be provided detailed information from the Sponsor to be used when completing your tax return. We can assist you or your CPA in the reporting process.