Private Securities · Accredited Investors

DST 1031 Exchange
Replacement Properties

Delaware Statutory Trusts may allow accredited investors to defer capital gains taxes when selling investment real estate while gaining access to professionally managed properties without hands-on landlord duties.

What Is a DST?

Delaware Statutory Trust – explained

A Delaware Statutory Trust (DST) is a legally recognized entity that holds investment real estate. Multiple investors hold fractional beneficial interests in the trust, which qualifies as “like-kind” property under IRS Section 1031 rules.

This structure may allow investors who are selling investment property to potentially defer capital gains and depreciation recapture taxes by reinvesting into a DST rather than directly purchasing a replacement property.

There is no guarantee this strategy will achieve its investment objectives. Investments are illiquid, subject to risk, and available to accredited investors only.

Passive Ownership

Investors hold a beneficial interest - no property management, maintenance, or tenant responsibilities.

Institutional-Grade Properties

DSTs typically hold large commercial, multifamily, or industrial properties that individual investors may not access independently.

Accredited Investors Only

DST 1031 exchange offerings are private placements available exclusively to accredited investors under Regulation D.

DST 1031 exchanges may potentially defer capital gains and depreciation recapture taxes. There is no guarantee of success. Investments involve risk and are illiquid. Consult your tax advisor.

Aerial view of modern apartment building at sunset

Key 1031 Requirements

Identification Deadline 45 days
Exchange Completion Deadline 180 days
Property Type Like-Kind
Investor Qualification Accredited Only
Potential Benefits

Why investors consider DSTs

These are potential – not guaranteed – benefits. All DST investments carry risk and are illiquid. Always consult your tax and financial advisors.

Potential Tax Deferral

A successful 1031 exchange may defer capital gains taxes and depreciation recapture taxes from the sale of your investment property.

Not guaranteed. Consult your tax professional.

No Active Management

DST investors hold a passive beneficial interest – there are no landlord responsibilities, tenant issues, or property maintenance obligations.

Passive ownership structure – no guarantees of income.

Institutional Real Estate Access

DSTs typically hold large commercial properties – multifamily, industrial, medical, retail – properties structured specifically for 1031 exchange investors.

Not guaranteed. Consult your tax professional.

Geographic Diversification

Some DSTs hold properties across multiple locations, which may provide geographic diversification within a single exchange investment.

Diversification does not guarantee protection from loss.

Simplified Exchange Process

DST interests can often be identified and purchased more quickly than locating, financing, and closing on a direct replacement property.

Timeline varies by offering availability and structure.

Institutional Real Estate Access

We guide you through the accredited investor verification process required under Regulation D – ensuring you meet requirements before reviewing offerings.

Verification required before viewing private offering documents.

IS A DST RIGHT FOR YOU?

When a DST is the right fit

DSTs aren’t for everyone, but they solve specific challenges that many real estate investors face.

45-Day Deadline Pressure

You’re selling investment property and the 45-day identification window is closing fast. DSTs offer pre-packaged replacement properties that can be identified quickly.

Tired of Managing Property

You no longer want the responsibilities of being a landlord, including tenant calls, maintenance, and vacancies, but you still want real estate exposure and potential income.

Partial Exchange Needs

You want to defer taxes on part of your sale proceeds while taking some cash out. DSTs allow flexible allocation so you can split your exchange across multiple properties.

Geographic Diversification

Your real estate holdings are concentrated in one market. DSTs provide access to institutional properties across multiple states and property types.

The Exchange Process

How a DST 1031 Exchange works

The 1031 exchange process is time-sensitive. Working with an experienced representative early is critical to meeting IRS deadlines.

01

Sell Your Property

You sell your investment property and the proceeds are held by a Qualified Intermediary (QI) – not directly by you – to preserve the exchange.

Day 0
02

Identify Replacement

Within 45 days of closing, you must identify up to three potential replacement properties. DSTs can be identified quickly, which is a key advantage.

By Day 45
03

Complete Exchange

You must complete the purchase of replacement property within 180 days of your sale date. Proceeds from the QI are directed to the DST offering.

By Day 180
04

Ongoing Passive Income

As a DST beneficial interest holder, you may receive periodic distributions and a pro-rata share of proceeds when the trust eventually sells.

Ongoing
PROPERTY TYPES

Institutional-quality real estate

DST sponsors typically acquire stabilized, income-producing properties across major asset classes.

NNN Retail
Triple-net lease retail properties where tenants pay all operating expenses, taxes, and insurance, providing investors with potential income distributions, which are not guaranteed and may vary based on tenant performance and property operations.

Class A Apartments
Premium multifamily residential communities with modern amenities, professional management, and strong occupancy in prime metro locations.

Self-Storage
Climate-controlled and traditional storage facilities with diversified tenant bases, low maintenance costs, and recession-resilient demand.

Medical Office
Healthcare-focused office buildings typically leased to medical practices, health systems, and specialty clinics with longer-term lease structures.

Industrial & Warehouses
Distribution centers and logistics facilities serving e-commerce and supply chain operations, one of the fastest-growing commercial real estate sectors.

Important Risk Disclosures

What investors must understand

DST 1031 exchanges are complex, illiquid investments. Understanding the risks and limitations is fundamental before considering any strategy.

Illiquidity & Long Hold Periods

DST interests have no public secondary market. Capital is typically locked for 5–10 years until the trust sells its properties. If you need to exit early, options may be limited and at a discount.

Loss of Control

As a beneficial interest holder, you have no say in property management decisions, tenant selection, capital improvements, or disposition timing. The sponsor and property manager make all operational decisions.

No Guarantee of Tax Deferral

Tax deferral is not guaranteed. Changes in tax law, improper exchange structure, or early cash receipt can disqualify the exchange.

Real Estate Market & Loss Risk

All real estate investments can lose value. Economic conditions, vacancies, and property-specific issues may reduce or eliminate returns, including total loss of principal.

Distribution Risk

Distributions are not guaranteed and depend on the performance of the underlying property, occupancy rates, and operating expenses. Distributions may be reduced or suspended at any time.

Foreclosure & Leverage Risk

Many DSTs use leverage (debt). If the property fails to perform, foreclosure is possible, which could result in total loss of investment.

Higher Fee Structures

DST investments may carry higher fees than direct property ownership, including sponsor fees, offering costs, and ongoing asset management fees.

Tax Law Change Risk

Future changes to IRS regulations governing 1031 exchanges could affect the tax treatment of DST investments and related strategies.

Common Questions

Frequently asked questions

We believe education comes before any investment decision. Find answers to the questions we hear most often from clients considering a DST 1031 exchange.

Ready to explore a 1031 Exchange strategy?

A discovery consultation is the first step. We’ll review your situation and explain whether a DST 1031 exchange may be appropriate for your goals.