For many real estate investors, managing property starts to feel like a second job. Tenants call at inconvenient times. Repairs eat into profits. Market timing becomes stressful.

That’s where a Delaware Statutary Trust 1031 strategy can make a real difference.

A Delaware Statutory Trust, often called a DST, allows investors to complete a 1031 exchange while moving into a more passive ownership structure. Instead of managing property yourself, you own a fractional interest in a professionally managed real estate asset.

If you’re exploring Available DSTs as part of your next exchange, here’s what you need to know.

What Is a Delaware Statutory Trust 1031?

A Delaware Statutory Trust 1031 exchange combines two concepts:

  1. Section 1031 exchange – A tax strategy that allows you to defer capital gains taxes when selling investment property by reinvesting into a like-kind property.

  2. Delaware Statutory Trust (DST) – A legal entity that holds title to investment real estate, allowing multiple investors to own fractional interests.

The IRS recognizes DST interests as eligible replacement property for 1031 exchanges. That means you can sell a rental property and reinvest the proceeds into a DST while deferring taxes.

Instead of owning and managing a building yourself, you own a share of a larger asset. That asset could be:

  • Multifamily communities

  • Medical offices

  • Industrial warehouses

  • Retail centers

  • Self-storage facilities

The property is managed by a professional sponsor. You receive distributions based on your ownership percentage.

Why Investors Choose a DST for a 1031 Exchange

1. Passive Income

Many investors turn to a Delaware Statutory Trust 1031 structure when they’re ready to step away from active management. There are no tenant calls, leasing duties, or maintenance coordination.

You invest. The sponsor handles operations.

2. Access to Institutional-Grade Properties

DSTs often include large, stabilized properties that individual investors may not access on their own. For example, a $50 million apartment complex may be divided among multiple investors.

This creates opportunities for diversification across property types and geographic regions.

3. Simplified 1031 Deadlines

One challenge of a 1031 exchange is timing. Investors have:

  • 45 days to identify replacement properties

  • 180 days to close

Because Available DSTs are pre-structured offerings, they can help investors meet these tight deadlines more easily than sourcing and negotiating a direct property purchase.

How Available DSTs Work

When exploring Available DSTs, you’ll typically review a Private Placement Memorandum (PPM) outlining:

  • Property details

  • Projected income and returns

  • Lease terms

  • Debt structure

  • Sponsor track record

Investors purchase fractional interests, and income distributions are paid according to the business plan.

For example, if you sell a rental property for $1 million, you could allocate your exchange proceeds across multiple DST offerings. This may allow you to diversify between multifamily, industrial, and healthcare assets rather than relying on a single building.

Key Benefits of a Delaware Statutory Trust 1031 Strategy

Diversification

You can spread capital across different asset classes and regions.

Reduced Management Burden

Professional sponsors manage the property.

Estate Planning Advantages

DST interests can simplify estate transitions compared to individually owned property.

Potential Stable Cash Flow

Many DSTs focus on stabilized, income-producing assets with long-term leases.

Risks and Considerations

While a Delaware Statutory Trust 1031 exchange offers clear advantages, it’s not right for everyone.

  • Illiquidity: DST investments are typically long-term holds.

  • Limited control: Investors do not make operational decisions.

  • Market risk: Property performance depends on market conditions.

  • Accredited investor requirements: Many DST offerings are limited to accredited investors.

Careful review of Available DSTs and sponsor history is essential. Past performance doesn’t guarantee future results, but it can provide helpful context.

Is a DST Right for You?

A Delaware Statutory Trust 1031 strategy may make sense if:

  • You’re tired of hands-on property management

  • You want a predictable income

  • You’re nearing retirement

  • You want to diversify your portfolio

  • You need a quick replacement option during a 1031 exchange

It may not be ideal if you want full operational control or short-term liquidity.

Final Thoughts

A Delaware Statutory Trust 1031 exchange gives real estate investors a way to defer taxes while transitioning into passive ownership. By reviewing Available DSTs carefully and aligning them with your financial goals, you can structure a strategy that supports long-term growth and income.

If you’re preparing to sell an investment property, it’s worth exploring how a DST could fit into your exchange plan. The right structure can help you protect capital, reduce stress, and keep your money working for you.