If you’ve owned investment real estate for a long time, you may be sitting on significant gains, and a significant tax problem.
A lot of investors feel stuck. They’d like to sell, simplify, or diversify, but they don’t want to trigger a large capital gains tax bill.
One strategy that doesn’t get talked about enough is the Delaware Statutory Trust (DST).
A Delaware Statutory Trust is a structure that allows investors to complete a 1031 exchange into institutional-grade real estate, without having to actively manage the property themselves.
Here’s why it can be compelling:
- You can defer capital gains taxes through a 1031 exchange
- You move from active landlord to passive investor
- You can diversify across property types and geographies
- In certain structures (depending on the sponsor and lender), investors may have the ability to refinance and access up to 85% of their equity without triggering taxes*
That last point is what really caught my attention.
For investors who feel “trapped” in a property because of taxes, this can create flexibility, potentially unlocking liquidity while keeping tax deferral intact.
Now let me be clear:
DSTs are not simple.
They are illiquid.
Fees and sponsor quality matter a lot.
And not all refinance structures are created equal.
This is not something you jump into casually.
If you’re considering a DST:
- Talk to your CPA
- Talk to a qualified 1031 intermediary
- Understand the sponsor’s track record
- Review debt terms carefully
- Do serious due diligence
I’ve built relationships with strong operators and providers in this space, and I’m happy to make introductions if you’re exploring options or just want to understand whether this strategy could apply to your situation.
If you’re sitting on a highly appreciated property and feel boxed in, there may be more flexibility than you realize.
Reach out if you’d like to talk through it.