Delaware Statutory Trusts (DSTs) blend the best of two worlds: like-kind investment exposure for 1031 exchanges and a fully passive ownership experience.

✅ Fully 1031-Compatible, Completely Passive

Because DST shares are treated by the IRS as “like-kind” property, they qualify for 1031 tax deferral—but with no landlord headaches. Ownership responsibilities—including leasing, maintenance, and financing—are handled entirely by the sponsor/trustee 1031gateway.com+121031gateway.com+121031gateway.com+12.

🚫 Leave Management Behind, Not Growth Potential

If you’ve built equity in an investment property but are burned out on landlord duties—or just want diversification—DSTs let you reinvest into institutional-grade commercial assets without the operational burden .

🚀 Passive Income & Tax Deferral—No Trade-Off

Sell your appreciated property, roll the proceeds into a DST, and retain the advantages of real estate: steady cash flow, property appreciation, and ongoing depreciation—while deferring taxes indefinitely en.wikipedia.org+21031gateway.com+21031gateway.com+2.

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How It Works – A Simple Strategy

1. Sell your current investment property using IRC §1031.

2. Acquire fractional ownership in a DST that holds quality commercial real estate.

3. Collect rental income and participate in property appreciation—all while the trustee handles day-to-day operations.

4. Maintain like-kind basis and continue tax deferral.

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Strategic Advantages at a Glance

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Who Should Consider DSTs?

• Investors ready to retire landlord duties but committed to real estate cash flow.

• Those seeking diversified exposure to large commercial assets with smaller capital outlay.

• Individuals selling appreciated property who want tax-efficient reinvestment in real estate.

 

FAQ’s

1. How do I evaluate whether a specific DST is a good fit for my 1031 exchange goals?

Start by aligning the DST’s asset type, geography, and lease structure with your investment objectives. Consider your risk tolerance—some DSTs hold single-tenant net-leased retail, while others include multi-tenant industrial or healthcare facilities. Review sponsor experience, tenant credit, debt structure (if any), expected hold period, and projected cash flow. A reputable DST sponsor will provide a Private Placement Memorandum (PPM) with detailed financials and disclosures. Work with a qualified intermediary or DST advisor to ensure the investment matches your timeline, risk profile, and long-term exchange strategy.

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2. What are the risks or downsides of investing in a DST compared to owning property directly?

DSTs are passive by design, so you give up control. You won’t have a say in property management decisions, refinancing, or asset sales. DSTs are also illiquid—there’s no secondary market, and early exit options are limited. Additionally, some DSTs use leverage, which introduces loan risk. Returns aren’t guaranteed and depend on property performance. That said, for many investors, the trade-off of control for peace of mind and diversification is well worth it—especially in retirement or succession planning scenarios.

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3. Can I use a DST as part of a larger portfolio strategy, or is it only suitable for 1031 exchanges?

Absolutely, DSTs can play a valuable role beyond just tax deferral. Even without a 1031 exchange, investors can purchase DST interests with cash to gain exposure to high-quality real estate with predictable income. They’re often used to balance out more volatile or time-consuming holdings, like private equity or actively managed rentals. For estate planning, DSTs simplify asset transfer and valuation—beneficiaries receive a stepped-up basis, which can reduce capital gains tax. Whether you’re seeking hands-free income, tax efficiency, or long-term diversification, DSTs can serve as a powerful complement to your broader portfolio.