What a DST is
A Delaware Statutory Trust holds real estate and sells fractional beneficial interests. The IRS treats a DST interest as like-kind property, so it can be a valid 1031 replacement.
Why investors use it
DSTs offer a passive, professionally managed option — useful if you want out of active management or need to place exchange funds quickly to meet the 45-day deadline.
The tradeoffs
You give up control and liquidity, and fees apply. DSTs are securities sold to accredited investors, so weigh them against direct ownership.
Frequently asked questions
Does a DST qualify for a 1031 exchange?
Yes — a beneficial interest in a DST is treated as like-kind replacement property.
Who can invest in a DST?
Generally accredited investors, since DST interests are securities.
Sources
Educational information and estimates only. Not tax advice. Tax rules change and vary by situation; consult a qualified tax professional before acting.