DST Real Estate Investment & 1031 Exchange

DST Real Estate Investment & 1031 Exchange

1031 exchanges, an IRS-recognized tax deferral strategy, allow investors to defer capital gains and depreciation recapture taxes. Commercial real estate assets can be held in Delaware Statutory Trusts (DSTs), investment vehicles that facilitate 1031 exchanges. There are a number of potential benefits to investing in DSTs for accredited investors. In Delaware, a Delaware Statutory Trust (DST) is a trust that holds title to 100% of real property interest.

An investor acquires a beneficial interest in the trust, with limited liability for its assets. An investor in a DST owns no fractional or undivided interest in the property, unlike a co-owner in a Tenancy in Common (TIC). Due to this, DST investors are not required to share the associated costs of ownership.


The 1031 DST Exchanges have the following objectives

1031 exchanges are IRS-recognized tax deferral strategies that allow investors to defer capital gains and depreciation recapture taxes by selling investment properties and acquiring similar properties.


  • Potentially tax-efficient, non-correlating income
  • Potential capital appreciation
  • Access to quality real estate through fractional ownership


Delaware Statutory Trusts: Potential Benefits

DSTs have become increasingly popular for 1031 exchanges because of the various benefits of ownership through trusts. Among the potential benefits are:

  • No personal loan recourse for investors on property-level debt
  • Lower minimum investment
  • Potential for multi-property diversification
  • Multiple, more flexible, exit strategies
  • Potential Risks of a Delaware Statutory Trust

Along with the benefits, investors should be aware of several potential risks associated with DST exchange programs.

“Our tax-deferred 1031 exchange programs can save millions in taxes, increase investor equity, and compound annual cash flow distributions and returns”