What Is a DST in a 1031 Exchange?
Delaware Statutory Trusts (DSTs) in a 1031 Exchange
While many people are familiar with 1031 Exchanges, often even experienced professionals—real estate investors, CPAs, brokers, and attorneys—are unaware of how a Delaware Statutory Trust (DST) can be used to complete a 1031 Exchange.
We provide clients access to institutional-quality real estate structured as DSTs—an approach that combines the tax advantages of a 1031 Exchange with the benefits of professional asset management and diversification.
What Is a DST?
A DST is a legal entity that allows multiple investors to hold fractional interests in real estate. When structured correctly, a DST may qualify as a replacement property in a 1031 Exchange, allowing investors to defer all taxes while transitioning from actively managed real estate into a more passive investment.
Why Consider a DST in a 1031 Exchange?
A DST can offer a variety of potential advantages for those selling appreciated real estate.
Tax Deferral
DSTs are structured to qualify as like-kind property under IRS rules, allowing you to defer all taxes when used as replacement property in a 1031 Exchange.
Access to Institutional Real Estate
DSTs provide fractional ownership in institutional-grade commercial properties—such as multifamily, medical office, industrial, or retail—that individual investors typically wouldn’t access on their own.
No Management Responsibilities
Because DSTs are completely passive investments, all property management and decision-making responsibilities are handled by a professional sponsor—no landlord duties required.
Diversification
DSTs can offer exposure to multiple properties across different geographic regions and asset types within a single investment, helping to reduce concentration risk.
Predictability and Flexibility
DSTs are often pre-packaged and ready to close, offering 1031 Exchangers a flexible option with more predictable timelines—especially helpful when working to meet the 45-day identification window.
Non-Recourse, Institutional Financing
When financing is used, DSTs typically come with pre-arranged, non-recourse loans, eliminating the need for personal guarantees while still meeting debt replacement requirements for an exchange.
Flexible Investment Minimums
DSTs usually have minimum investment thresholds of around $100,000, allowing you to meet your exact exchange amount or split proceeds among multiple offerings for better alignment with your goals.
Ready to Explore DST Options for Your 1031 Exchange?
We’ll walk through your goals and see if a DST is the right fit for your exchange strategy.
Review our current DST offerings.