Hotel Retirement Solution: 1031 Exchange into DSTs

Hotel owners frequently contact Kay Properties and Investments looking for a retirement solution. They have labored for decades building up their business and now it is time to sell the property and retire. However, optimism is often replaced by anxiety when their CPA calculates the tax consequence to discover the standard of living hoped for may not be feasible.

Kay Properties and Investments works with hotel owners to help achieve their retirement goals through a 1031 exchange into a portfolio of DST properties specifically tailored with the following objectives in mind:

• Defer Tax Consequence: 1031 Exchange allows the hotel owner to potentially defer capital gains taxes, depreciation recapture tax, and others. DST properties qualify for pass-through tax treatment to the investor, including passive losses like depreciation. Additionally, heirs will receive a step up in basis upon the passing of the original owner, just like other real estate ownership. Investors should always discuss their unique tax considerations with a tax professional prior to investing.
• Potential for Passive Income: Delaware Statutory Trust properties are truly passive. There are no oversight responsibilities or management obligations whatsoever.
• Non-recourse debt: No need to apply for a loan, nor does it show up on credit reports. DST debt is held on the property alone. If the hotel owner does not need to take on debt, Kay Properties has debt-free DST options as well.
• Diversification*: Many hotel owners like DSTs because of the ability diversify their investment into various DST properties. Why risk years of hard work and late nights by parking your entire wealth in a single property? Kay Properties develops tailored portfolios of DST properties diversified by asset type and asset class throughout the country. Diversification does not guarantee profits or protect against losses.
• Legacy Planning:  DST shares are more easily divisible between multiple heirs than a single asset. This way, heirs are much less likely to be forced to make stressful and often controversial decisions of whether they should liquidate a property or not once inherited.

If you would like to speak to a licensed professional at Kay Properties and Investment with experience working with hotel owners, contact the information below to receive your free consultation.

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