What is a Delaware Statutory Trust (DST)?

A Delaware Statutory Trust is a legal entity created under Delaware law that allows multiple investors to hold fractional ownership interests in institutional-quality real estate assets. DSTs are structured as passive investments — meaning investors receive income distributions without any landlord or management responsibilities. They qualify as like-kind property for 1031 exchange purposes and are available exclusively to accredited investors.

What types of properties are held in DSTs?

DST properties typically include institutional-quality assets such as multifamily apartment communities, net-lease retail properties, industrial warehouses, medical office buildings, and self-storage facilities. These are assets that individual investors would rarely be able to access on their own.

What are the risks of investing in a DST?

DSTs are illiquid investments — there is no public market for DST interests, and investors should expect to hold for the full investment term (typically 5–10 years). Returns are not guaranteed, and the value of the underlying real estate can fluctuate. DSTs are not suitable for all investors. We strongly recommend reviewing the full offering documents and consulting with a qualified financial and tax advisor before investing.

What is the minimum investment for a DST?

Minimum investment amounts vary by offering but typically range from $25,000 to $100,000. For 1031 exchange investors, the full exchange equity must be reinvested to achieve full tax deferral.

Can a DST be used in a 1031 exchange?

Yes. Delaware Statutory Trusts qualify as like-kind replacement property under IRS Revenue Ruling 2004-86, making them eligible for use in a 1031 exchange. Investors can defer capital gains taxes by reinvesting proceeds from a property sale into a DST within the required 1031 exchange timelines.

Delaware Statutory Trust (DST) FAQ | True North Private Investments

A 1031 exchange (named after Section 1031 of the IRS tax code) allows real estate investors to defer capital gains taxes when selling an investment property — as long as the proceeds are reinvested into a like-kind replacement property within specific IRS timelines. A properly executed 1031 exchange can defer taxes indefinitely and preserve significant equity that would otherwise be lost to federal and state taxes.

There are two critical IRS deadlines:

45-Day Identification Period — You must identify potential replacement properties within 45 days of selling your relinquished property

180-Day Exchange Period — You must close on the replacement property within 180 days of the sale

Missing either deadline disqualifies the exchange and triggers the capital gains tax. Working with an experienced advisor helps ensure you identify and close on qualifying replacement properties within these windows.

“Like-kind” is broader than most investors realize. Any real property held for investment or business use generally qualifies — including residential rentals, commercial buildings, raw land, and Delaware Statutory Trusts. Primary residences and properties held primarily for sale (like fix-and-flip projects) do not qualify.

Yes. The IRS confirmed in Revenue Ruling 2004-86 that Delaware Statutory Trust interests qualify as like-kind replacement property for 1031 exchange purposes. DSTs are one of the most popular 1031 exchange options for investors who want to defer taxes while transitioning out of active property management.

We’re happy to walk through any of these topics in more detail during a complimentary consultation. Every investor’s situation is different — and the right strategy depends on your goals, timeline, and tax picture.

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1031 Exchange FAQ

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