What is DST 1031 Exchange? – What You Need to Know

What Is a DST 1031 Exchange?

Are you wondering what is DST 1031 exchange? It is a combination of two powerful real estate tools: the traditional 1031 tax-deferred exchange and investment in a Delaware Statutory Trust (DST).

Essentially, instead of buying a new property outright in your exchange, you invest in a share of a professionally managed real estate asset via a DST. It’s a smart and streamlined way to defer capital gains taxes while going passive.

A DST 1031 exchange opens doors to larger, institutional-grade properties without landlord headaches.

The Basics

• Sell Your Property – Begin with a qualifying investment or business property. Use a Qualified Intermediary to avoid accessing sales proceeds directly.
• Identify Replacement – You have 45 days to choose a DST offering as your replacement asset.
• Close Within 180 Days – Invest the proceeds into your selected DST shares within 180 days.
• Passive Ownership – You become a fractional owner; the DST sponsor handles property management.
• Defer Taxes – You defer capital gains and depreciation recapture while continuing to earn passive income.

Why Investors Choose DST through ALT Financial Network, Inc.

Tax Deferral & Equity Preservation

A DST 1031 exchange preserves the equity from your sold property within a like-kind asset. This keeps more money working for you instead of going to Uncle Sam.

Access to Institutional Real Estate

DSTs invest in high-quality properties—think medical offices and industrial facilities—normally out of reach for individual investors. You can step into these markets with a relatively low entry point.

Hands-Off Management

Say goodbye to tenant issues and property repairs. DST sponsors take care of day-to-day ops, letting you enjoy passive income without landlord stress.

Built-In Diversification

Wondering how to spread risk? You can pick multiple DST investments, each in different property types or regions—boosting diversification with ease.

Speedy Closings

Once you choose a DST, closings are fast—typically 3–5 business days. This helps you meet tight 1031 deadlines stress-free.

Advantages and Disadvantages

Is DST 1031 Right for You?

Now that you know what is DST 1031 exchange you must determine whether it is for you or not.

You might be a good fit if you:

• Want to stop managing properties but still need income
• Need a fast and smooth 1031 exchange process
• Prefer portfolio diversification with smaller investments
• Can tolerate long holding periods and limited control

However, steer clear if you:

• Want full control over property decisions
• Might need your capital back early
• Prefer direct ownership without sponsor fees

DST 1031 vs. Traditional 1031 Exchange (Whole Property)

How to Execute a DST 1031 Exchange

1. Consult with ALT Financial Network – Our team knows DSTs, 1031, and reverse 1031 exchange rules backward and forward.
2. Pick Your DST – We’ll help you find high-quality DST offerings aligned with your goals.
3. Hire a Qualified Intermediary – We can recommend trusted QIs to handle the funds securely.
4. File Identifications & Form 8824 – We ensure your paperwork meets IRS deadlines and regs.
5. Close & Start Earning – Invest in DST shares, and let the distributions begin.

ALT Financial Network, Inc. and DST 1031 Expertise

ALT Financial Network, Inc. guides investors into DST 1031 exchanges with clarity and professionalism. Our deep knowledge of DST structures, combined with strict IRS compliance, helps investors maximize tax deferral while easing into passive real estate ownership.

We work alongside your other advisors to create a custom-tailored exchange that aligns with your estate and financial goals.

A Real Example

Imagine selling a 750-unit apartment building. Instead of snagging one big replacement, you invest $500K each into three DSTs focused on office, industrial, and net-lease assets.

You get monthly income, avoid direct management, and defer taxes—all while owning real estate.

Make the DST 1031 Move with Confidence

A DST 1031 exchange can transform how you manage real estate—turning active duties into passive income and unlocking opportunities previously out of reach.

With ALT Financial Network’s guidance, you get expert support at every turn. From choosing an ideal DST to handling paperwork and keeping everything IRS-compliant, we’re by your side.

Are you ready to go over what is DST 1031 exchange in person and discover if this strategy suits your goals? Reach out today. Defer taxes, diversify easily, and experience real estate investing without lifting a hammer.

Also Read: 1031 Exchange 5-Year Rule 

FAQs

Q1. Can you do a DST 1031 exchange more than once?
A1. Yes, you can. As long as you follow IRS rules, you can keep rolling over gains from one DST 1031 exchange to another and defer taxes indefinitely.

Q2. Are DST 1031 exchanges allowed for out-of-state properties?
A2. Yes. You can sell a property in one state and invest in a DST located anywhere in the U.S., as long as both properties qualify under 1031 exchange rules.

Q3. What is the minimum investment required for a DST 1031 exchange?
A3. Most DST sponsors require a minimum investment of $25,000 to $100,000. The exact amount depends on the offering, but it’s typically lower than buying full real estate outright.

Q4. Can DST properties generate monthly income?
A4. Yes. Many DSTs distribute rental income from tenants to investors on a monthly or quarterly basis. It’s a popular reason why investors like the passive cash flow DSTs offer.

Q5. Is it possible to include a DST in an estate plan?
A5. Absolutely. DST interests can be passed to heirs, and when that happens, the stepped-up basis may eliminate deferred capital gains taxes, offering estate planning advantages for families.