Delaware Statutory Trust (DST)
A trust that owns real estate and lets you buy a fractional interest that qualifies as 1031 replacement property.
Definition
A Delaware Statutory Trust (DST) is a legal entity that holds title to one or more properties and sells fractional beneficial interests to investors. Under IRS Revenue Ruling 2004-86, a properly structured DST interest is treated as direct ownership of real estate, so it can serve as replacement property in a 1031. DSTs are professionally managed and passive, which appeals to investors who want to defer tax without landlording.
Why it matters
A DST can be a backstop identification — a place to park proceeds if your primary target falls through before day 45 — and a way to diversify. They are securities, illiquid, and carry fees, so they suit some investors and not others; get advice.
Related terms
General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.