The 1031 Exchange Institute

Welcome to The 1031 Exchange Institute™. The 1031 Exchange Institute is your complete online resource for 1031 exchange, 1033 exchange, 1034 exchange, 721 exchange, 453 installment sale and 121 exclusion information.  Information will also be provided regarding Self-Directed IRAs, including Traditional IRAs, ROTH IRAs, SEP-IRAs and SIMPLE IRAs. 

The 1031 Exchange Institute is dedicated to educating and informing real estate investors and their advisors on the benefits of 1031 tax-deferred exchanges and other tax deferred and tax exlcusion strategies so they can make better informed investment decisions.

What is a Delaware Statutory Trust?

The Delaware Statutory Trust, often referred to by its nickname of DST, is a separate legal entity drafted as a trust under the laws of the state of Delaware.  The DST is also known as a Delaware Business Trust.  The Delaware Statutory Trust is considered to be an investment trust that will be classified as a trust for federal tax purposes.  As such, the DST is classified as a "pass-thru" entity and a "disregarded entity" so that any and all income tax consequences will "pass-thru" to the investor's individual income tax return.

Property Held by Trustee of the Delaware Statutory Trust

Investors no longer hold legal title to the investment property as they did under the Tenant-In-Common or TIC investment structure, but instead acquire a beneficial interest in the Delaware Statutory Trust or DST. They are now considered a beneficiary of the Delaware Statutory Trust of DST.  Legal title to the investment property is now held in the name of the Trustee of the Delaware Statutory Trust.

Delaware Statutory Trust Qualifies for 1031 Exchange

The purchase or sale of a beneficial in a Delaware Statutory Trust or DST qualifies for tax-deferred exchange treatment under Section 1031 of the Internal Revenue Code ("1031 Exchange").  Investors can sell their existing investment property and 1031 Exchange into a beneficial interest in one or more Delaware Statutory Trusts or DSTs.  They can also sell their beneficial interest in a Delaware Statutory Trust or DST and 1031 Exchange into another DST or into other property selected through the assistance of their Realty.

Revenue Ruling 2004-86

The Internal Revenue Service ("IRS") approved the use of Delaware Statutory Trusts or DSTs for 1031 Exchange replacement property solutions when they issued Revenue Ruling 2004-86