What is a 1031 exchange?
A 1031 exchange is a section of the IRS code that lets you defer capital-gains and depreciation-recapture taxes when you sell an investment property — provided you reinvest the proceeds into another "like-kind" investment property within a strict timeline.
- • 45 days from sale to identify replacement property
- • 180 days from sale to close on it
- • Equal-or-greater value and debt to fully defer tax
What is a DST?
A Delaware Statutory Trust is a legal entity that holds title to one or more institutional-quality properties. As an investor you purchase beneficial interests in the trust — the IRS recognizes those interests as "like-kind" real estate, which makes them eligible replacement property for a 1031 exchange.
Why investors choose DSTs
Truly passive
Sponsors run the property. You receive distributions.
Lower minimums
Typical entry around $100k vs. millions for whole assets.
Diversification
Spread equity across multiple properties or sectors.
Deadline relief
Pre-vetted inventory closes quickly inside the 45/180 window.
Risks to understand
DSTs are illiquid, long-hold investments (typically 5–10 years), and distributions are not guaranteed. Real-estate values can decline, and you cede day-to-day control to the sponsor. Always review the private placement memorandum with a qualified advisor.