INVESTOR'S GUIDE
Key Reasons to Consider identifying a DST in your 1031 Exchange
A short guide to Delaware Statutory Trusts and why more 1031 exchange investors are identifying one alongside, or instead of, a traditional replacement property.
INVESTOR'S GUIDEBOOK
A safety net for your next exchange
Navigating the real estate market during a 1031 exchange can be daunting, but Delaware Statutory Trusts (DSTs) may simplify the experience. Because they're pre-packaged and qualify as like-kind property, DSTs can act as a reliable backup when a primary replacement property falls through, helping ensure your exchange closes and your tax deferral stays intact. This guide walks through six reasons investors are identifying a DST alongside their exchange.
- How a DST lets you defer capital gains taxes on the sale of investment property
- Why DSTs can generate passive, professionally managed income
- How fractional ownership opens the door to institutional-grade diversification
- Why DSTs act as a safety net if your exchange timeline is at risk
- How to put "leftover" exchange proceeds to work instead of taking taxable boot
- Why a DST doesn't have to be a permanent exit from active property ownership
EXCESS PROCEEDS, IN NUMBERS
What "leftover" proceeds are worth if you don't let them go
A simplified, hypothetical scenario from inside the guide: an investor sells a relinquished property for $1.5M, closes on a $1.3M replacement, and has to decide what to do with the remaining $200K.
TAKE THE BOOT
~$50,000
estimated tax due on $200K of taxable boot, at a ~25% combined rate
INVEST IT IN A DST
$0
tax due; the full $200K continues working toward your investment goals
$200K kept invested, not paid to the IRS from the same exchange, without changing the primary property
Hypothetical example for illustrative purposes only; it does not represent an actual or specific investment. Actual figures depend on individual tax circumstances and are never guaranteed. Consult your tax advisor. Full detail is in Reason Five of the guide.
INSIDE THE GUIDE
Six reasons, one download
Written for investors who are already exchanging and want to know where a DST might fit: as a primary strategy, a backup, or a place to park leftover proceeds.
Potential to Defer Capital Gains Taxes
Why DSTs qualify as like-kind property under Section 1031, and how deferring the tax bill keeps more capital working for you.
Generate Passive Income
Regular distributions and professional asset management, without the day-to-day responsibilities of being a landlord.
Diversify Your Real Estate Holdings
Fractional ownership of institutional-grade properties across asset types, tenants, and geographies, at a fraction of the capital it would take to buy outright.
Assurance Your Exchange Will Close
How a pre-packaged, readily available DST can act as a reliable backup when a primary replacement property falls through late in the exchange timeline.
Opportunity to Invest "Leftover" Exchange Proceeds
Putting excess proceeds to work in a DST instead of taking taxable boot, with lower minimums than buying a whole property.
Ability to Exchange Back into Active Ownership
Why a typical DST hold period still leaves the door open to return to direct, hands-on property ownership down the road.
FREE DOWNLOAD
Get the guide before you finalize your identification
Whether you're weighing a DST as a backup or as your primary strategy, this is the reference to read before your 45-day identification window closes.
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1031 Risk Disclosure:
• There is no guarantee that any strategy will be successful or achieve investment objectives;
• Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments;
• Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities;
• Potential for foreclosure – All financed real estate investments have potential for foreclosure;
• Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments.
• Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions;
• Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits.
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