--- title: Delaware Statutory Trust Investment Property Offerings - How They Work and What You Need to Know description: Delaware Statutory Trust participations are accepted by the IRS to reinvest the proceeds from the sale of a property and defer capital gains taxes. image: https://www.realized1031.com/hubfs/Images/photo/abstract/holographic-man-building-IS-1278790768.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # Delaware Statutory Trust Investment Property Offerings - How They Work and What You Need to Know Posted Feb 14, 2021 ![holographic-man-building-IS-1278790768](https://www.realized1031.com/hs-fs/hubfs/Images/photo/abstract/holographic-man-building-IS-1278790768.jpg?width=750&height=392&name=holographic-man-building-IS-1278790768.jpg) As a real estate investor seeking to maximize return and manage tax obligations, you may be interested in [Delaware Statutory Trust](https://www.realized1031.com/glossary/delaware-statutory-trust-dst) offerings if you examine options for fractional participation. Like Tenant in Common investments, Delaware Statutory Trust participations are accepted by the IRS to reinvest the proceeds from the sale of a property and defer the realization of capital gains taxes. This status means that you can use a [1031 exchange](https://www.realized1031.com/glossary/1031-exchange) to enter into or exit from a DST. Unlike a TIC structure, in a DST, the ownership of the properties is held by the trust, and the investors are beneficiaries of the trust. TICs are limited to 35 investors, while DST organizations do not restrict the number of participants. The DST is organized by a [sponsor](https://www.realized1031.com/glossary/dst-sponsor), usually a real estate firm that creates the investment opportunity for funding. The sponsor identifies, acquires, funds, and manages the DST property or properties on behalf of the investors. The DST sponsor often arranges for a master tenant to lease and maintain the assets the trust holds. This arrangement provides an advantage for the individual investor entering into a pre-packaged deal with due diligence and financing already completed. There are advantages to the investor: - Passive investment means that you do not have to maintain day-to-day involvement with the administration of the property. - Diversification is simple. By choosing various DSTs, you can spread your ownership across property types, even with limited funds. This is true notwithstanding the “like-kind” requirement of Section 1031 of the Internal Revenue Code, since the purpose of the replacement investment property does not have to match the function of the relinquished asset. - Higher quality investments are attainable. By leveraging the trust's pooled equity, you can own a portion of an institutional quality property that you might not have access to independently. Investors should also be cognizant of the limitations inherent in the DST structure: - Once closed, no additional capital contributions to the DST are allowed. - DSTs cannot renegotiate the terms of existing loans or borrow any new funds. - A DST cannot reinvest proceeds from the property's sale; it must distribute all proceeds to the beneficiaries. - Capital expenditures are limited to (a) routine repair and maintenance, (b) non-structural improvements, and (c) those required by law. - Cash held between distributions may only be invested in short-term debt. - All cash, other than reserves, must be distributed on a current basis. Distributions from DSTs are typically made quarterly. - DSTs are considered illiquid investments. They typically have holding periods between five and ten years. There is a secondary market for DST shares, but there is no certainty that an investor will be able to sell when they want to. - The trustee cannot enter into new leases or renegotiate current leases. Prospective investors should be aware of the risks, and participation is limited to accredited investors (generally those with a net worth of over one million dollars, not including the primary residence or individual income over $200,000.) Always consult your tax advisor. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. Download The Guide To DSTs [![The Investor's Guidebook To DSTs](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/DST-eBook-250.png?width=250&height=250&name=DST-eBook-250.png "See if Delaware Statutory ...") ](https://www.realized1031.com/blog/delaware-statutory-trust-investment-property-offerings-how-they-work-and-what-you-need-to-know#blogform) Download eBook ---   --- ### The Investor's Guidebook To DSTs ![Download The Guide To DSTs](https://www.realized1031.com/hs-fs/hubfs/Images/UI/graphics/composites/DST-eBook-550.jpg?width=550&height=650&name=DST-eBook-550.jpg) See if Delaware Statutory Trusts are right for you. By providing your email and phone number, you are opting to receive communications from Realized. If you receive a text message and choose to stop receiving further messages, reply STOP to immediately unsubscribe. Msg & Data rates may apply. To manage receiving emails from Realized visit the Manage Preferences link in any email received. 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Like Tenant in Common investments, Delaware Statutory Trust participations are accepted by the IRS to reinvest the proceeds from the sale of a property and defer the realization of capital gains taxes. This status means that you can use a 1031 exchange to enter into or exit from a DST. Unlike a TIC structure, in a DST, the ownership of the properties is held by the trust, and the investors are beneficiaries of the trust. TICs are limited to 35 investors, while DST organizations do not restrict the number of participants. The DST is organized by a sponsor, usually a real estate firm that creates the investment opportunity for funding. The sponsor identifies, acquires, funds, and manages the DST property or properties on behalf of the investors. The DST sponsor often arranges for a master tenant to lease and maintain the assets the trust holds. This arrangement provides an advantage for the individual investor entering into a pre-packaged deal with due diligence and financing already completed. There are advantages to the investor: Passive investment means that you do not have to maintain day-to-day involvement with the administration of the property. Diversification is simple. By choosing various DSTs, you can spread your ownership across property types, even with limited funds. This is true notwithstanding the “like-kind” requirement of Section 1031 of the Internal Revenue Code, since the purpose of the replacement investment property does not have to match the function of the relinquished asset. Higher quality investments are attainable. By leveraging the trust's pooled equity, you can own a portion of an institutional quality property that you might not have access to independently. Investors should also be cognizant of the limitations inherent in the DST structure: Once closed, no additional capital contributions to the DST are allowed. DSTs cannot renegotiate the terms of existing loans or borrow any new funds. A DST cannot reinvest proceeds from the property's sale; it must distribute all proceeds to the beneficiaries. Capital expenditures are limited to (a) routine repair and maintenance, (b) non-structural improvements, and (c) those required by law. Cash held between distributions may only be invested in short-term debt. All cash, other than reserves, must be distributed on a current basis. Distributions from DSTs are typically made quarterly. DSTs are considered illiquid investments. They typically have holding periods between five and ten years. There is a secondary market for DST shares, but there is no certainty that an investor will be able to sell when they want to. The trustee cannot enter into new leases or renegotiate current leases. Prospective investors should be aware of the risks, and participation is limited to accredited investors (generally those with a net worth of over one million dollars, not including the primary residence or individual income over $200,000.) Always consult your tax advisor. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. 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