Who can invest in a DST?

DST offerings are securities generally sold to accredited investors through licensed broker-dealers or registered representatives, who walk you through the offering documents.

How long is my money tied up in a DST?

Typically until the sponsor sells the underlying property, often a 5-to-10-year horizon. DST interests are illiquid, so plan around that.

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DST 1031 exchange: pros and cons

A Delaware Statutory Trust (DST) lets you complete a 1031 exchange into fractional interests in institutional-grade real estate without managing anything yourself. It is a popular option for investors who want to defer tax but are done being landlords. Here is an honest look at both sides.

What a DST is

A DST is a trust that owns real estate; you buy beneficial interests in it. IRS Revenue Ruling 2004-86 confirms those interests qualify as like-kind property for a 1031, so you can defer your gain. A sponsor structures and manages the offering.

The pros

Truly passive: no tenants, toilets, or management.
Helps meet the 45-day deadline and can absorb leftover proceeds.
Access to larger, institutional assets you could not buy alone.
Diversification across properties or markets.

The cons

Illiquid: typically held until the sponsor sells, often 5 to 10 years.
No control over decisions or the sale timing.
Fees reduce returns, and returns are not guaranteed.
Sold as securities, generally to accredited investors only.

Who it fits

DSTs suit investors nearing the end of the 45-day window, those who want to retire from active management, or those with leftover proceeds to place. They are a poor fit if you need liquidity or want hands-on control. Always read the offering's private placement memorandum and talk to a licensed representative.

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Frequently asked questions

Who can invest in a DST?: DST offerings are securities generally sold to accredited investors through licensed broker-dealers or registered representatives, who walk you through the offering documents.
How long is my money tied up in a DST?: Typically until the sponsor sells the underlying property, often a 5-to-10-year horizon. DST interests are illiquid, so plan around that.

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Educational information only, not tax, legal, or investment advice. 1031 rules and deadlines are strict and can change, so confirm with the IRS and your own CPA or attorney before acting. How we source content.