Delaware Statutory Trusts

A Delaware Statutory Trust (DST) is a type of investment where multiple investors pool their money to own shares in large commercial properties like apartment buildings, office spaces, or shopping centers. The trust holds the property title, and the investors earn income from rents collected.

DSTs are popular because they qualify for 1031 exchanges, which allow investors to defer paying capital gains taxes when they sell one property and reinvest the proceeds into a DST, keeping more money working for them. However, only accredited investors—people who meet specific financial requirements, like having a net worth of $1 million (excluding their home) or earning more than $200,000 annually—can participate in DSTs.

The tax advantages of DSTs are particularly beneficial because, under the 1031 exchange rule, investors don’t immediately pay taxes on the gains from selling a property if they roll that money into a DST. This deferment can be repeated multiple times, allowing for substantial tax savings over time. DSTs are also passive investments, meaning investors don’t have to manage the properties directly, which makes them appealing to those looking for stable, hands-off income streams.