Educational Resources
Learn everything you need to know about 1031 exchanges and Delaware Statutory Trusts. Our comprehensive guides and analysis help you make informed investment decisions.
Capital Gains Tax Calculator
Calculate your exact tax liability on real estate sales for all 50 states. Includes federal, state, NIIT, and depreciation recapture.
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Check out our FAQ section for quick answers to the most common questions about 1031 exchanges and DSTs.
View FAQ →1031 Exchange: A Full Guide
New to 1031 exchanges? Start here. We break down the fundamentals, key rules, and critical timelines in plain language so you can understand this powerful tax strategy.
What is a DST in Real Estate?
Understand the basics of DSTs, how they work as alternative investments, and why many real estate investors choose them for their 1031 exchanges.
Delaware Statutory Trusts: Pros and Cons
A balanced look at the advantages and disadvantages of investing through a Delaware Statutory Trust. Understand both the benefits and considerations.
What is a 1031 Exchange in Real Estate?
Learn what a 1031 exchange is, how it enables tax deferral, and the like-kind property rules that make it such a valuable tool for real estate investors.
The Seven Deadly Sins of DSTs: A Comprehensive Guide
Discover the IRS restrictions that govern Delaware Statutory Trusts and what they mean for investors. Learn about the seven deadly sins that ensure DSTs remain passive investments.
Problems with DSTs: The Truth About Delaware Statutory Trusts
Understand the potential challenges and drawbacks of Delaware Statutory Trust investments, including liquidity concerns, fee structures, and other important considerations.
What is the Delaware Statutory Trust 1031 Strategy?
Learn how Delaware Statutory Trusts work as a 1031 exchange replacement property strategy, combining tax deferral with passive real estate investment.
Frequently Asked Questions
Get answers to the most common questions about 1031 exchanges and Delaware Statutory Trusts (DSTs) to help you make informed investment decisions.
How to Avoid Capital Gains Tax on Real Estate
Learn the most effective strategies to legally avoid or defer capital gains tax when selling real estate, from 1031 exchanges and DSTs to installment sales and opportunity zones.
Tired Landlord? How a 1031 Exchange Can Set You Free
Burned out from managing rental properties? Learn how tired landlords can use a 1031 exchange to escape active management while keeping their wealth growing tax-free.
DST vs REIT: Which Real Estate Investment is Right for You?
Compare Delaware Statutory Trusts and Real Estate Investment Trusts side by side. Understand the key differences in tax treatment, liquidity, returns, and which is better for your situation.
1031 Exchange into DST: The Complete Step-by-Step Guide
A comprehensive walkthrough of how to complete a 1031 exchange into a Delaware Statutory Trust, from selling your property to receiving your first distribution check.
How to Sell Rental Property Without Paying Taxes
Discover the legal strategies rental property owners use to sell their investment properties while minimizing or eliminating capital gains taxes, depreciation recapture, and more.
Frequently Asked Questions
What is a 1031 exchange?
A 1031 exchange is a tax-deferral strategy under Section 1031 of the IRS code, allowing real estate investors to sell an investment property and reinvest the proceeds into another "like-kind" property, deferring capital gains taxes. The term "like-kind" is broader than many people realize; it doesn't mean the properties have to be the same type. For example, an investor can sell a commercial building and exchange it for a multifamily property, vacant land, or even a Delaware Statutory Trust (DST). This strategy is widely used to grow real estate portfolios, preserve equity, and defer taxes on profits.
What is a Delaware Statutory Trust (DST)?
A Delaware Statutory Trust (DST) is a legal entity used for real estate investing, allowing multiple investors to pool funds to own fractional interests in large, income-producing properties. DSTs are commonly used in 1031 exchanges, enabling investors to defer capital gains taxes while gaining passive income from professionally managed properties without the responsibilities of direct ownership. You own a fractional interest in professionally managed properties.
How long do I have to complete a 1031 exchange?
You have 45 days to identify replacement properties and 180 days to close on your purchase. These are strict IRS deadlines that cannot be extended.
Can I use a DST for a 1031 exchange?
Yes! A DST is a like-kind property for 1031 exchange purposes, making it an excellent option for investors seeking passive income without active property management.
How much can I make with a DST?
With a DST, you can typically expect to earn 4-5% in cash flow, which is paid out to you in monthly distributions. Over time, with property appreciation, your total returns can reach 10-12%. This combination of steady monthly income and long-term growth makes DSTs an attractive option for investors looking for passive income and potential appreciation without the hassle of managing the property themselves. Keep in mind, actual returns can vary depending on the market and the specific properties within the DST.
How to Invest in a Delaware Statutory Trust?
Here's how to set up your investment: 1) Educate Yourself – Start by exploring all available resources to learn about DSTs and 1031 exchanges. 2) Connect with a Qualified Intermediary (QI) – A QI is essential for guiding you through the 1031 exchange process and ensuring compliance with IRS guidelines. 3) Execute the 1031 Exchange into the DST – Once you've sold your property, the QI will facilitate transferring your equity into a DST. From there, you can start receiving monthly cash flow while your investment grows in value.
Does a Delaware Statutory Trust Require Accredited Investor Status?
Yes, to invest in a Delaware Statutory Trust (DST), you need to be an accredited investor. An accredited investor is a person or entity that meets specific financial criteria: Income Test - earned income exceeding $200,000 (or $300,000 with a spouse) in each of the last two years; Net Worth Test - net worth exceeding $1 million (excluding primary residence), either individually or jointly with a spouse. Entities may qualify if they have assets exceeding $5 million or if all equity owners are accredited investors.
Do I need a Qualified Intermediary?
Yes. The IRS requires you to use a Qualified Intermediary (QI) to handle your 1031 exchange funds. You cannot touch the money yourself or the exchange fails. The QI ensures that your property sale and reinvestment comply with IRS guidelines, helping you defer taxes effectively.
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