Comprehensive Guide to DSTs - Delaware Statutory Trust

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DST Strategy – Complete your 1031 Exchange through a DST for passive ownership in institutional-grade real estate.

QOZ Opportunity – Defer or eliminate capital gains by reinvesting through a Qualified Opportunity Zone fund.

Energy Investment – Explore oil, gas, and mineral rights strategies designed for current income and significant tax advantages.

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**An accredited investor, in the context of a natural person, includes anyone who: a) earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR b) has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). Click here for information, or details on Accredited Entities.

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Directory:

CHAPTER 01 What Is A Delaware Statutory Trust?

CHAPTER 02 The History and Legal Foundations of the DST

CHAPTER 03 How DSTs Work Within a 1031 Exchange

CHAPTER 04 The IRS Rules Governing DSTs

CHAPTER 05 The Tax Benefits of DST Investing

CHAPTER 06 Beyond Taxes: The Other Benefits of DSTs

CHAPTER 07 Who Should Consider A DST?

CHAPTER 08 Understanding the Risks and Considerations of a DST

CHAPTER 09 Types of DST Properties and Asset Classes

CHAPTER 10 The Parties to a DST Investment

CHAPTER 11 A Step-by-Step Guide to Investing in a DST

CHAPTER 12 DST Exit Strategies: When The Trust Sells

CHAPTER 13 The 721 Exchange and the UPREIT

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Step 1 of 3 – What Brings You Here Today?

Select your service*

I’M ON A DEADLINE! – The 45-day clock is ticking. Get help identifying replacement options now.

DST Strategy – Complete your 1031 Exchange through a DST for passive ownership in institutional-grade real estate.

QOZ Opportunity – Defer or eliminate capital gains by reinvesting through a Qualified Opportunity Zone fund.

Energy Investment – Explore oil, gas, and mineral rights strategies designed for current income and significant tax advantages.

Marketplace Inquiry – Talk through a specific property you’re considering or get strategy guidance on a current offering.

Not Sure Yet – I’d like Daniel’s expert guidance on which path fits my situation.

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Beyond Taxes: The Other Benefits of DSTs

The tax advantages we covered in the last chapter are the reason most investors first look at a Delaware Statutory Trust.

But they are far from the whole story. Ask investors who have actually made the move, and many will tell you that some of the benefits they value most have nothing to do with the IRS.

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Getting Your Life Back

Every landlord knows the “three T’s“: tenants, toilets, and trash. The midnight phone call about a burst pipe. The vacancy that drags on for months. The tenant who stops paying and won’t leave. For years — often decades — active real estate ownership can be a second job that never really ends.

A DST hands that job to someone else. Because the sponsor and its professional managers handle every operational detail, the investor’s role is genuinely passive: you review the opportunity carefully up front, and after that you receive your share of the income. For an investor who has spent thirty years building a portfolio one headache at a time, that shift can be profound. It’s not just about money: it’s about reclaiming the one thing no investment return can give back: your time.

Access to Real Estate You Couldn’t Buy Alone

On your own, your capital reaches only so far. A DST changes the scale of what’s possible.

By pooling capital from many accredited investors, DSTs acquire the kind of institutional-grade real estate that is ordinarily the exclusive province of pension funds and large investment firms: 300-unit apartment communities, national distribution centers, medical office portfolios, senior housing, student housing, self-storage, and net-leased retail. These are frequently properties valued well over $100 million, professionally managed and often leased to creditworthy, nationally recognized tenants on long-term leases.

For an individual investor, a DST is a rare chance to own a slice of exactly the kind of asset that has long been out of reach.

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Step 1 of 3 – What Brings You Here Today?

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I’M ON A DEADLINE! – The 45-day clock is ticking. Get help identifying replacement options now.

DST Strategy – Complete your 1031 Exchange through a DST for passive ownership in institutional-grade real estate.

QOZ Opportunity – Defer or eliminate capital gains by reinvesting through a Qualified Opportunity Zone fund.

Energy Investment – Explore oil, gas, and mineral rights strategies designed for current income and significant tax advantages.

Marketplace Inquiry – Talk through a specific property you’re considering or get strategy guidance on a current offering.

Not Sure Yet – I’d like Daniel’s expert guidance on which path fits my situation.

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Diversification in a Single Exchange

Direct ownership tends to concentrate risk. Sell one building and buy another, and you’ve moved all your eggs from one basket to another: a single property in a single market, often dependent on a single tenant or a handful of tenants.

A DST investor can spread that risk. Because DST interests are fractional, an exchanger can divide the proceeds of a single sale across several trusts — a multifamily DST in one region, a portfolio of net-leased retail properties in another, an industrial asset in a third. In one transaction, an investor can achieve a level of diversification across property type, geography, and tenant that would be impractical or impossible to build through direct ownership. That diversification doesn’t eliminate risk, but it can meaningfully soften the blow if any single property or market underperforms.

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Step 1 of 3 – Step 1 of 3 – What Brings You Here Today?

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Step 1 of 3 – What Brings You Here Today?

Select your service*

I’M ON A DEADLINE! – The 45-day clock is ticking. Get help identifying replacement options now.

DST Strategy – Complete your 1031 Exchange through a DST for passive ownership in institutional-grade real estate.

QOZ Opportunity – Defer or eliminate capital gains by reinvesting through a Qualified Opportunity Zone fund.

Energy Investment – Explore oil, gas, and mineral rights strategies designed for current income and significant tax advantages.

Marketplace Inquiry – Talk through a specific property you’re considering or get strategy guidance on a current offering.

Not Sure Yet – I’d like Daniel’s expert guidance on which path fits my situation.

Step 2 of 3 – Schedule Your Call

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Schedule

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Financing Without the Personal Guarantee

There’s a final benefit that tends to be underappreciated until an investor needs it. Many 1031 exchanges require the investor to replace not just the equity but also the debt from the relinquished property; otherwise, as our 1031 exchange guide explains, the shortfall becomes taxable mortgage boot. Ordinarily, replacing that debt means qualifying for a new loan and signing a personal guarantee.

In a DST, the sponsor arranges financing at the trust level, which is typically nonrecourse to individual investors. That means an investor receives a proportionate share of the property’s debt — satisfying the exchange’s debt-replacement requirement — without having to apply for a loan, submit to underwriting, or personally guarantee anything.

For older investors, retirees, or anyone who would rather not take on a new personal loan obligation, this is a genuine and welcome advantage.

An Illustration

Beyond Taxes: The Other Benefits of DSTs | Provident 1031 | Daniel Goodwin

Consider an investor we’ll call Ellen (the profile is a composite, but it’s one advisors in this field see constantly). Ellen and her late husband spent 30 years assembling a handful of rental properties, now worth several million dollars, with very little cost basis left after decades of depreciation.

In her seventies, Ellen is tired of managing tenants and contractors, but selling outright would trigger a capital gains and depreciation-recapture bill approaching a million dollars… and she has three children with no interest in becoming landlords themselves.

By exchanging her properties into a diversified set of DSTs, Ellen defers that entire tax bill, trades active management for passive monthly income, and — because DST interests divide cleanly — sets up an estate she can leave to her children in equal shares, with the prospect of a step-up in basis erasing the deferred gain entirely when they inherit. She keeps her wealth invested in quality real estate, stops fielding maintenance calls, and simplifies her legacy, all in a single move.

Ellen’s situation illustrates why so many investors turn to DSTs. But a DST is emphatically not right for everyone. In the next chapter, we’ll look honestly at exactly who should — and shouldn’t — consider one.

Previous Opportunity

The Tax Benefits of DST Investing

Next Opportunity

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Directory:

Step 1 of 3 – What Brings You Here Today?

Step 2 of 3 – Schedule Your Call

Step 3 of 3 – Your Information

Beyond Taxes: The Other Benefits of DSTs

Getting Your Life Back

Access to Real Estate You Couldn’t Buy Alone

Step 1 of 3 – What Brings You Here Today?

Step 2 of 3 – Schedule Your Call

Step 3 of 3 – Your Information

Diversification in a Single Exchange

Step 1 of 3 – What Brings You Here Today?

Step 2 of 3 – Schedule Your Call

Step 3 of 3 – Your Information

Financing Without the Personal Guarantee

An Illustration

The Tax Benefits of DST Investing

Who Should Consider A DST?

Looking For A Qualified Intermediary

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