Broker Check



  • A DST is a separate legal entity formed as a trust under Delaware law. When properly
    structured, the DST will be classified as a grantor trust for federal income tax purposes and, as a
    result, the purchaser of a beneficial interest in the trust will acquire an undivided interest in the
    asset(s) held by the DST. An investor can use a beneficial interest in a DST as replacement
    property in a 1031 or 1033 exchange.
  • A DST investor must be an “Accredited Investor” which means $1 million of net worth exclusive
    of primary home ownership, or $200,000 of income ($300,000 with a spouse).
  • The DST is structured so that each beneficiary (investor) owns a beneficial interest in the trust.
    The managing Trustee of the DST is either the Sponsor or an affiliate of the Sponsor.
  • The DST holds title to 100% of the interest in the property.
  • Tax reporting is done on a Schedule E utilizing property operating information provided by the
    sponsor. The IRS issued Revenue Ruling 2004-86 that set forth parameters a DST must meet in
    order to be viewed as a grantor trust.


  • The DST is the single owner and borrower. Accordingly, the lender only underwrites the DST, not
    each individual investor. Therefore, the loan is non-recourse to the investor and not reportable
    on any personal financial statement.
  • The transfer of a DST ownership interest to an investor can be easier and quicker since there is
    generally less paperwork and due diligence time required as compared with buying a property
  • A typical minimum investment of $100,000 allows more flexibility for investors to 1) diversify
    into several replacement properties and 2) to invest the exact amount needed to complete the
  • An investment in a DST is a passive investment with professional management in place for the
    DST and for the property. This relieves the owner/investor of the headaches and responsibilities
    associated with property management.
  • Many DSTs own large institutional grade properties or a portfolio of properties to reduce risk
    and provide economies of scale. Different property types are generally available, including net
    lease with major credit tenants, multifamily, medical office buildings, industrial, other.
  • The DST is sold as a security with several layers of due diligence performed, including third party
  • Investors can complete a 1031 exchange after the DST property is sold.
  • A DST owner’s estate is likely to benefit from a significant marketability valuation discount.

POTENTIAL DRAWBACKS OF DST OWNERSHIP (Includes, but is not limited to:)

  • A DST investment is an investment in real estate; and any real estate investment is subject to
    market value, rental income fluctuations, government regulations and other factors.
  • A DST owner does not have management control over day to day operations.
  • The investment in a DST is illiquid and no public market is likely to exist. While the sponsor may
    have an exit plan, there are no assurances that such plan will be realized.

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