SECURITIZED REAL ESTATE

Delaware Statutory Trusts & 1031 Exchanges

Where DST interests may enter a replacement-property strategy—and why tax analysis and securities regulation both matter.

DSTs can combine real-estate tax analysis with securities regulation.

Revenue Ruling 2004-86 addresses a specific Delaware statutory trust structure and the treatment of certain beneficial interests for federal tax purposes. In the marketplace, DST interests are commonly offered through private placements and may be securities subject to investor-eligibility, disclosure, broker-dealer and suitability requirements.

That means a DST conversation should not be reduced to “passive 1031 replacement property.” Sponsor quality, property underwriting, leverage, fees, liquidity, conflicts, distribution assumptions and exit mechanics all deserve diligence.

Professional lanes

Tax treatment should be reviewed with tax professionals. Securities offerings should be evaluated through appropriately licensed securities professionals and offering documents.

Primary / reference sources

NEXT STEP

Turn research into a cleaner professional handoff.

Use the national platform to understand the framework, then connect the transaction to the appropriate QI, CPA, attorney, broker, lender or licensed securities professional.