Property type
DST Structures
Educational overview for 1031 exchange planning. Not investment advice.
Category: Ownership StructurepassiveAsset class: Variousdst
Overview
A Delaware Statutory Trust (DST) is a passive ownership structure recognized by the IRS as like-kind for 1031 exchange purposes (Rev. Rul. 2004-86).
General characteristics
DSTs are typically offered as Reg D 506(c) private placements available only to accredited investors through registered representatives.
Potential benefits
- Passive ownership\n- Diversification across properties or sponsors\n- Pre-arranged debt; no personal guarantees
Potential risks
- Illiquidity for the full hold period (often 5–10 years)\n- Limited investor control\n- Fees and sponsor risk
Management requirements
Sponsor and trustee handle all day-to-day management.
Liquidity considerations
Very low — investors generally cannot exit before sponsor-led disposition.
Tax considerations
Treated as like-kind for 1031 exchange purposes; consult your CPA.
Common investor profiles
Accredited investors who completed a 1031 exchange and want passive replacement property.
Educational information only. The content on this page is general education and is not tax, legal, accounting, or investment advice. Consult your own CPA, attorney, and licensed investment professionals before making any decision related to a 1031 exchange or Delaware Statutory Trust.