When it comes to investing in real estate, many savvy investors understand the benefits of fractional or co-ownership arrangements. Less day-to-day management responsibilities, bigger and better investment properties become available to them, and they can diversify their investment portfolios beyond traditional single-owner properties.
But when an investor is ready to make the leap from single-ownership property to either a Tenancy In Common (TIC) or Delaware Statutory Trust (DST), the investor may be confused with the differences between the two. Here is a quick side-by-side comparison to clear things up.
|DST Structure||TIC Structure|
|IRS Reference||Rev. Ruling 2004-86||Rev. Procedure 2002-22|
|# of Investors||499 max.||35 max.|
|Ownership interest||Proportional in the DST itself, none in the actual property||Direct ownership of property as|
|Who Holds Deed?||The Trust||Individual Owners|
|Major Decision Approval||Owners – None.||Yes. Unanimous approval required.|
|# of Borrowers||One (the DST itself)||Each investor.|
|Personal Liability Protection||Yes||No – unless interest is held via LLC.|