A Delaware statutory trust (DST) permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties, which qualifies as replacement property as part of an investor's 1031 exchange transaction. A DST takes all decision-making out of the hands of investors and places it into the hands of an experienced sponsor-affiliated trustee. 

The DST is the single owner and agile decision maker on behalf of investors.

Most real estate investors can't afford to own multi-million dollar properties. DSTs allow investors to acquire partial ownership in properties that otherwise would be out of reach.

Loans are nonrecourse to the investor. The DST is the sole borrower. 

DSTs can accommodate much lower minimum investments, whereas 1031 exchange minimums often are $100,000.

Investors can divide their investment among multiple DSTs, which may provide for a more diversified real estate portfolio across geography and property types. 

All 1031 exchange investments receive a step-up in cost basis so your heirs will not inherit capital gain liabilities, and provides them with professional real estate management versus the burden of hands-on management. 

If for some reason the investor can't acquire the original property they identified, a secondary DST option allows them to meet the exchange deadlines and defer the capital gains tax.

Any remaining profit on the sale of your relinquished property is considered "boot." This remaining money becomes taxable unless you eliminate it. The excess cash (boot) can be invested in a DST to avoid incurring tax.

The DST structure allows the investor to continue to exchange real properties over and over again until the investor's death. 


Decide to do a 1031 Exchange

Are you ready to diversify or upgrade your investment property? Do you need to sell, but want to defer your capital gains tax? 1031-Exchange might be the right option for you. 


Sell your investment property

Exchanger & Buyer enter into a contract for the sale of the original investment property. An escrow is established as in a typical transaction. An Exchange Agreement is drawn up which assigns the contract to the accommodator, and upon buyer meeting all conditions in escrow, the title of the original investment property is conveyed to the accommodator. 

Simultaneous with the acquisition of the original investment property by the accommodator, title is conveyed to the buyer. 


Qualified Intermediary transfers proceeds

The Qualified Intermediary is a company that facilitates Section 1031 tax-deferred exchanges. The QI enters into a written agreement with the investor where the QI transfers the relinquished property to the buyer, while transferring the replacement property to the investor pursuant to the exchange agreement. 


Delaware Statutory Trust

The DST takes all the proceeds of the sale and invests it as a shared ownership in a single property or a portfolio of properties giving fractional ownership to satisfy the 1031 exchange transaction. The DST takes the decision-making out of the hands of the investors and places it into the hands of an experienced sponsor-affiliated trustee.  


Invest in DST

Exchanger receives beneficial interest in a DST. 


Owners of investment and business property may qualify for a 1031. Individuals, C corporations, S corporations, partnerships (general or limited), limited liability companies, trusts and any other taxpaying entity may set up an exchange of business or investment properties for business or investment properties under Section 1031.

  • The transaction must involve an exchange and not a sale of real properties. This means a seller (exchangor) cannot receive or control the proceeds of the sale.
  • All proceeds applied to a Delaware statutory trust (DST) giving fractional ownership where multiple investors can share ownership in a single property which qualifies as replacement property to the 1031 exchange.
  • We have successfully completed many exchanges, helping our clients defer hundreds of thousands of dollars in taxes.
  • We work with the best in the business and can refer you to our network of CPAs, attorneys, escrow companies and exchange facilitators.
  • We work efficiently and expeditiously to make sure deadlines are met.

Report on Form 8824 and file it on your tax return for the year in which the exchange occurred.

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