For many 1031 exchange investors, a Delaware Statutory Trust (DST) is appealing precisely because it produces income — passive, regular cash flow from professionally managed real estate, without the work of being a landlord. A DST holds income-producing real estate and distributes the net rental cash flow to its beneficial owners, typically monthly or quarterly. But understanding DST income means understanding more than a single headline yield number: it means knowing how distributions are actually generated, what cash-flow ranges are realistic for different property types, why those distributions are never guaranteed, how frequency and timing work, and how current income fits into your total return alongside debt paydown and potential appreciation. This guide walks through each of those. Note that DST interests are securities offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), to accredited investors after a suitability review; distributions are projections, not promises, and are not guaranteed. Verify the current rules and your specific situation with your advisors — this is educational information, not investment advice.
How DST Distributions Work
A DST distribution is your share of the net rental cash flow the trust's real estate generates. The mechanics are straightforward: the DST owns income-producing property — an apartment community, a net-lease retail building, an industrial warehouse, a medical office — and tenants pay rent. From that gross rent, the trust pays operating expenses (property management, insurance, taxes, maintenance) and debt service if the property carries a loan. What remains is net cash flow, and the DST distributes that to its beneficial owners in proportion to their fractional interests.
Because you own a beneficial interest in the trust rather than the property directly, you receive these distributions passively — you don't collect rent, chase tenants, or write checks for repairs. The trustee and the sponsor's asset manager handle operations, often through a master lease structure, and the cash flow simply arrives in your account on the trust's distribution schedule. Your distribution amount scales with the size of your investment: a larger fractional interest receives a proportionally larger share of the same net cash flow.
So a DST distribution is simply your proportional share of what's left after the property pays its expenses and debt service — passive income generated by real estate you own fractionally but don't manage. How DST distributions work — the trust collecting rent, paying operating expenses and debt service, and distributing the remaining net cash flow to beneficial owners in proportion to their interests, all handled passively by the trustee and sponsor — is the foundation of DST income. You receive cash flow without doing the work of a landlord, and your share scales with your investment. Understanding this mechanism frames everything else about DST income. A DST distribution is your proportional share of the net rental cash flow remaining after the property pays operating expenses and debt service, paid to you passively as a beneficial owner.
Typical Cash-Flow Ranges
Investors naturally want to know what kind of cash yield a DST might produce. Distribution rates vary meaningfully by asset class, leverage, and market conditions, so any range should be treated as a general illustration rather than a promise. Speaking broadly and non-promissorily, stabilized income-oriented DSTs have historically targeted current distribution rates in a range that depends heavily on the property type: net-lease and multifamily assets often sit toward the lower-to-middle of the range, while sectors with more operational intensity may target higher current yields to compensate for added risk.
Leverage is a major driver of the headline distribution rate. A DST that uses moderate non-recourse debt can show a higher current cash-on-cash distribution than an all-cash (debt-free) DST holding the same property, because the loan lets a smaller amount of equity control a larger asset — but that leverage also adds financing risk and amplifies the downside if income falls. Asset class matters too: a triple-net single-tenant property with a creditworthy tenant offers predictable but typically modest cash flow, while a multi-tenant or value-oriented property may target a higher rate with more variability.
So realistic DST cash-flow ranges depend on asset class and leverage, and any figure you see is a projection that varies by deal and over time — not a fixed, guaranteed rate. Typical cash-flow ranges — varying by asset class (net-lease and multifamily often lower-to-middle, more operational sectors higher) and by leverage (moderate non-recourse debt raising the headline cash-on-cash rate versus debt-free DSTs, while adding financing risk) — should be read as general illustrations, not promises. The number on a deal sheet is a projection that depends on occupancy, expenses, and debt service. Understanding what drives the range matters more than any single figure. DST cash-flow ranges vary by asset class and leverage and are always projections, not guarantees — net-lease and multifamily tend toward modest, predictable rates, while more operational or leveraged deals may target higher but more variable yields.
Any distribution rate on a DST offering is a projection, not a promise — it varies by asset class, leverage, and market conditions, and it can change as occupancy, expenses, and debt service change.
Why Distributions Aren't Guaranteed
DST distributions are never guaranteed, and understanding why is essential to investing wisely. A distribution is paid only from net cash flow — what's left after the property covers its expenses and debt service — and that cash flow depends on real-world operating performance. If occupancy falls, if a major tenant stops paying or vacates, if operating costs rise faster than rents, or if debt service consumes more of the income, the cash available to distribute shrinks. The sponsor can reduce, suspend, or temporarily cover distributions, but no one can promise a fixed payment.
Several specific risks can pressure distributions. Occupancy and tenant risk: vacancies and tenant defaults directly reduce rent. Expense risk: insurance, taxes, and maintenance can climb. Financing risk: if the DST carries debt, rising costs or a loan that must be refinanced can squeeze cash flow. Market and asset risk: a downturn in the property's sector or market can soften rents and renewals. Because a DST is a single pool of specific real estate, these risks are real and concentrated — which is part of why diversification across multiple DSTs is often discussed.
So a DST distribution reflects actual property performance, and because that performance can vary, the distribution can vary too — it is a projection backed by real estate, not a promised yield. Why distributions aren't guaranteed — because they're paid only from net cash flow, which depends on occupancy, tenant performance, operating expenses, and debt service, all of which can move against the property — is one of the most important things for an income-focused investor to internalize. Distributions can be reduced or suspended if performance weakens. Treating projected distributions as guaranteed is a mistake. DST distributions aren't guaranteed because they come only from net cash flow, which depends on occupancy, tenants, expenses, and debt service — any of which can decline and reduce or suspend the distribution.
Distribution Frequency & Timing
Most DSTs distribute cash flow on a regular schedule — monthly is common, though some distribute quarterly. The sponsor sets the schedule when the offering is structured, and it's disclosed in the offering documents, so you know in advance how often to expect a distribution. Monthly distributions can be appealing for investors who rely on the income for living expenses, since they more closely mirror the cadence of bills and other obligations, while quarterly schedules are also common and perfectly workable.
Timing is worth understanding too. There is often a brief ramp-up period after you invest, because a DST collects rent and pays expenses before it distributes the net, so your first distribution may be partial or arrive after a short delay depending on when in the cycle you funded. After that, distributions typically settle into the stated rhythm. Distributions are usually paid by direct deposit (ACH) to your bank account, and the sponsor provides periodic reporting on the property's performance so you can see how the income is tracking against projections.
So DST income arrives on a defined schedule — most often monthly, sometimes quarterly — with a short initial ramp-up, paid passively by direct deposit. Distribution frequency and timing — most DSTs paying monthly (some quarterly) on a sponsor-set, disclosed schedule, with a brief ramp-up before the first full distribution and ongoing payment by ACH alongside periodic performance reporting — shape the practical experience of DST income. Monthly cadence suits investors living on the income; quarterly works too. Knowing the schedule and the initial ramp-up sets accurate expectations. DSTs typically distribute monthly (sometimes quarterly) on a disclosed schedule, often after a brief ramp-up, paid passively by direct deposit with regular performance reporting.
- A DST distribution is your proportional share of net rental cash flow after the property pays operating expenses and debt service.
- Cash-flow ranges vary by asset class and leverage and are always projections, not guaranteed yields.
- Distributions can be reduced or suspended if occupancy, tenants, expenses, or debt service move against the property.
- Most DSTs distribute monthly (some quarterly) by direct deposit, with a brief ramp-up before the first full payment.
Income vs. Total Return
Current distributions are only one part of what a DST can return. Total return has three potential components: the current income you receive as distributions, the equity built as the property's debt is paid down over the hold, and any appreciation in the property's value realized when the DST sells (the full-cycle event). Focusing only on the headline distribution rate can be misleading, because a DST with a modest current yield but meaningful debt paydown and appreciation potential may deliver a stronger total return than a higher-yielding deal with no growth.
This matters for how you evaluate offerings. A debt-free DST may show a lower current distribution rate but carries no financing risk and lets all of the property's income flow to operations and distributions rather than to a lender. A leveraged DST may show a higher current rate, and the loan paydown can build equity over the hold, but the leverage adds risk and the appreciation is uncertain. None of the growth components — debt paydown realized at sale, or appreciation — is guaranteed, and at full cycle you can choose to exchange again via another 1031, pursue a 721 UPREIT, or take cash (a taxable event), depending on your goals.
So a DST's value is the combination of current income, equity from debt paydown, and potential appreciation — not the distribution rate alone. Income versus total return — recognizing that current distributions are only one of three components, alongside debt paydown over the hold and potential appreciation realized at the full-cycle sale, so a modest-yield DST can outperform a higher-yield one on total return — reframes how to evaluate DST income. Growth components aren't guaranteed, and the full-cycle outcome (1031 again, 721 UPREIT, or cash) shapes the realized total return. Looking past the headline yield to total return is the sophisticated way to assess a DST. DST total return combines current distributions, equity from debt paydown, and potential appreciation at sale — so the headline distribution rate alone doesn't tell the whole story.
The headline distribution rate is the part of a DST's return you can see today — but debt paydown and potential appreciation, realized at the full-cycle sale, can matter just as much to your total return.
How to Evaluate a DST's Income Profile
When you assess a DST for income, look past the headline distribution rate to the quality and durability of the cash flow behind it. Start with the tenancy: a single creditworthy tenant on a long triple-net lease offers predictable income but concentration risk, while a diversified multi-tenant property spreads tenant risk but may have more turnover. Examine lease terms, remaining lease duration, occupancy, and the tenant's credit. Then study the expenses and the sponsor's projections — are the assumptions for rent growth, vacancy, and operating costs reasonable, or aggressive?
Leverage and the loan deserve close attention. Review the loan-to-value, the interest rate, whether the debt is fixed or floating, and when the loan matures relative to the expected hold — a loan maturing before a planned sale introduces refinancing risk that can affect distributions. Consider the sponsor's track record, fees, and how those fees affect the net cash flow reaching you. Finally, weigh the asset class and market: is the property in a sector and location with durable demand, and does the income profile fit your need for stability versus growth?
So evaluating DST income means looking through the distribution rate to tenant quality, lease terms, expenses, leverage, sponsor, and market — the factors that determine whether the cash flow is durable. How to evaluate a DST's income profile — scrutinizing tenancy and lease terms, occupancy and tenant credit, the reasonableness of expense and rent assumptions, the loan structure and maturity, sponsor track record and fees, and the asset class and market — reveals whether a projected distribution is durable or fragile. The headline rate is a starting point, not the answer. A disciplined evaluation focuses on the durability of the cash flow, not just its size. Evaluating a DST's income means examining tenant quality, lease terms, expenses, leverage, sponsor, and market to judge whether the projected distribution is durable — not just how high it looks.
How Baker 1031 Helps You Understand DST Income
Baker 1031 Investments helps investors understand DST income — how distributions work, what cash-flow ranges are realistic for different asset classes and leverage levels, why distributions aren't guaranteed, how frequency and timing work, and how current income fits into total return — so you can evaluate DST offerings with clear, realistic expectations rather than chasing a headline yield.
DST interests are securities offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), to accredited investors after a suitability review that considers your financial situation, income needs, time horizon, and risk tolerance. We help you read an offering's distribution projections in context — examining tenant quality, lease terms, expenses, leverage, sponsor track record, and the asset class — and weigh current income against debt paydown and potential appreciation for a fuller picture of total return. Baker 1031 does not provide tax or legal advice; your CPA and attorney handle your specific tax situation, including how DST income is reported and taxed. We are candid that distributions are projections, not promises — they depend on occupancy, expenses, and debt service, and they can be reduced or suspended; returns are never guaranteed, and past performance does not guarantee future results. Our role is to help you understand DST income clearly and invest only when a DST is suitable for your goals and risk tolerance.
Frequently Asked Questions
How do DST distributions work?
A DST distribution is your proportional share of the net rental cash flow the trust's real estate generates. The DST owns income-producing property — an apartment community, a net-lease building, an industrial warehouse — and tenants pay rent. From that gross rent, the trust pays operating expenses (management, insurance, taxes, maintenance) and debt service if the property carries a loan; what remains is net cash flow, which the DST distributes to beneficial owners in proportion to their fractional interests. Because you own a beneficial interest rather than the property directly, you receive these distributions passively — you don't collect rent or manage tenants. The trustee and the sponsor's asset manager handle operations, often through a master lease, and the cash flow arrives on the trust's schedule. Your distribution amount scales with your investment: a larger fractional interest receives a proportionally larger share of the same net cash flow. So a DST distribution is simply passive income from real estate you own fractionally but don't manage.
What cash-flow rate should I expect from a DST?
Distribution rates vary meaningfully by asset class, leverage, and market conditions, so any figure should be treated as a general illustration rather than a promise. Speaking broadly and non-promissorily, stabilized income-oriented DSTs have historically targeted current distribution rates that depend heavily on property type: net-lease and multifamily assets often sit toward the lower-to-middle of the range, while sectors with more operational intensity may target higher current yields to compensate for added risk. Leverage is a major driver — a DST using moderate non-recourse debt can show a higher current cash-on-cash rate than an all-cash DST holding the same property, but that leverage adds financing risk. The number on any deal sheet is a projection that depends on occupancy, expenses, and debt service, and it can change over time. So focus on what drives the rate — tenant quality, lease terms, expenses, and leverage — rather than the headline figure alone, and remember it is never guaranteed.
Are DST distributions guaranteed?
No — DST distributions are never guaranteed. A distribution is paid only from net cash flow, which is what's left after the property covers its operating expenses and debt service, and that cash flow depends on real-world operating performance. If occupancy falls, a major tenant stops paying or vacates, operating costs rise faster than rents, or debt service consumes more of the income, the cash available to distribute shrinks. The sponsor can reduce, suspend, or temporarily support distributions, but no one can promise a fixed payment. Several risks can pressure distributions: occupancy and tenant risk, expense risk, financing risk if the DST carries debt, and market or asset-sector risk. Because a DST is a single pool of specific real estate, these risks are real and concentrated, which is part of why diversifying across multiple DSTs is often discussed. So treat any projected distribution as a projection backed by real estate, not a promised yield — it reflects actual property performance, which can vary.
How often do DSTs pay distributions?
Most DSTs distribute cash flow on a regular schedule — monthly is common, though some distribute quarterly. The sponsor sets the schedule when the offering is structured and discloses it in the offering documents, so you know in advance how often to expect a distribution. Monthly distributions can be appealing for investors who rely on the income for living expenses, since they more closely mirror the cadence of bills, while quarterly schedules are also common and perfectly workable. There is often a brief ramp-up period after you invest, because the DST collects rent and pays expenses before distributing the net, so your first distribution may be partial or arrive after a short delay depending on when you funded. After that, distributions typically settle into the stated rhythm. Distributions are usually paid by direct deposit (ACH), and the sponsor provides periodic reporting so you can see how the income tracks against projections. So expect a defined, disclosed schedule with a short initial ramp-up.
What is the difference between income and total return on a DST?
Current distributions are only one part of what a DST can return. Total return has three potential components: the current income you receive as distributions, the equity built as the property's debt is paid down over the hold, and any appreciation realized when the DST sells at full cycle. Focusing only on the headline distribution rate can mislead, because a DST with a modest current yield but meaningful debt paydown and appreciation potential may deliver a stronger total return than a higher-yielding deal with no growth. A debt-free DST may show a lower current rate but carries no financing risk; a leveraged DST may show a higher rate and build equity through loan paydown, but the leverage adds risk and appreciation is uncertain. None of the growth components is guaranteed, and at full cycle you can exchange again via another 1031, pursue a 721 UPREIT, or take cash. So a DST's value is the combination of income, debt paydown, and potential appreciation — not the distribution rate alone.
Can a DST stop paying distributions?
Yes — a DST can reduce or suspend distributions, because they're paid only from net cash flow that depends on the property's performance. If occupancy declines, a significant tenant defaults or vacates, operating expenses rise sharply, or debt service strains the property, the cash available to distribute can fall, and the sponsor may reduce or temporarily suspend distributions. This is a real risk, not a remote one, and it's why offering materials describe distributions as projections rather than promises. Diversifying across multiple DSTs, asset classes, and sponsors can soften the impact of any single property underperforming, but it doesn't eliminate the risk. When you evaluate a DST, look at the durability of the cash flow — tenant quality, lease terms, occupancy, expense assumptions, and the loan structure — to judge how resilient the distribution is likely to be. So plan for the possibility that distributions can change, size your DST exposure accordingly, and don't rely on a projected distribution as if it were a guaranteed, fixed income stream.
Does leverage affect DST distributions?
Yes — leverage is one of the biggest drivers of a DST's headline distribution rate. A DST that uses moderate non-recourse debt can show a higher current cash-on-cash distribution than an all-cash (debt-free) DST holding the same property, because the loan lets a smaller amount of equity control a larger asset, concentrating the income onto less equity. But that same leverage adds financing risk and amplifies the downside: if income falls, the property still owes debt service, which can squeeze the cash available to distribute, and a loan maturing before a planned sale introduces refinancing risk. A debt-free DST shows a lower current rate but eliminates financing risk and lets all the property income flow to operations and distributions rather than to a lender. Leverage also matters for 1031 investors who need to replace debt from their relinquished property to fully defer their gain. So consider not just whether leverage raises the headline rate, but how it changes the risk profile and whether it fits your situation and need for debt replacement.
When do I receive my first DST distribution?
There is usually a brief ramp-up period before your first full DST distribution. Because a DST collects rent and pays expenses before distributing the net cash flow, your first distribution may be partial or arrive after a short delay, depending on when in the trust's cycle you funded your investment. For example, if you invest mid-cycle, your initial distribution might be prorated for the portion of the period you were invested. After this initial ramp-up, distributions typically settle into the stated schedule — monthly for many DSTs, quarterly for some — and arrive on a predictable rhythm. Distributions are generally paid by direct deposit (ACH) to your bank account, and the sponsor provides periodic performance reporting. The offering documents disclose the distribution schedule and any details about the initial period, so review them to set accurate expectations. So expect a short ramp-up before steady distributions begin, and confirm the timing in the offering materials rather than assuming a full payment immediately after funding.
Are DST distributions taxable?
DST income is generally taxable, but its character and reporting are specific to the grantor-trust structure. The DST is typically treated as a grantor trust, so the income, expenses, and depreciation flow through to each investor's share, and you report your portion on your return — often via a grantor letter or substitute information from the sponsor. Importantly, depreciation passes through and can shelter part of your DST income, so the amount of cash you receive isn't necessarily the amount that's currently taxable. You also carry over basis from your relinquished property (adjusted for depreciation), which affects the gain calculated at the eventual full-cycle sale. Because a DST is usually acquired through a 1031 exchange, the deferred gain follows you into the trust. The tax details can be technical, and they vary by situation. Baker 1031 does not provide tax advice; coordinate with your CPA on how DST income is reported and taxed in your specific case, and verify the current rules, since they can change.
What happens to my income when the DST sells?
A DST has a finite life and is generally expected to be held for roughly five to seven years before the sponsor sells the property — the full-cycle event. When that sale happens, the current distribution income from that property ends, and you receive your proportional share of the net sale proceeds. At that point you typically have choices: you can complete another 1031 exchange into a new replacement property (continuing to defer your gain and re-establishing an income stream), pursue a 721 UPREIT exchange into a REIT's operating partnership (converting to a different income vehicle), or take the cash, which is a taxable event that recognizes the deferred gain. If you exchange again, you can re-establish DST or other replacement-property income; if you take cash, the income stream from that DST simply ends. The timing of a full-cycle sale isn't guaranteed and depends on market conditions and the sponsor's judgment. So plan for the hold to end, and think ahead about how you'll redeploy the proceeds to continue or conclude your income strategy.
Is DST income passive?
Yes — DST income is passive. Because you own a beneficial interest in the trust rather than the real estate directly, you don't manage tenants, collect rent, handle maintenance, or make operating decisions. The trustee and the sponsor's asset manager run the property, frequently through a master lease structure, and the net cash flow is simply distributed to you on the trust's schedule, usually by direct deposit. This passivity is one of the main reasons 1031 investors choose DSTs — it lets them continue deferring capital-gains tax through like-kind real estate while stepping out of active landlord duties, which is especially appealing for retirees or those tired of hands-on management. The trade-off for that passivity is a lack of control: you can't make management decisions, choose tenants, or direct when the property is sold. So DST income is genuinely hands-off, professionally managed real estate income — you give up control in exchange for not having the responsibilities of direct ownership. For many investors seeking income without the work, that trade-off is the appeal.
How is DST cash flow different from REIT dividends?
Both DSTs and REITs produce real estate income, but the structures and tax positions differ. A DST distributes net rental cash flow from a specific pool of property to its beneficial owners, and a DST interest is like-kind real property eligible for a 1031 exchange — so you can defer capital-gains tax by exchanging into and out of DSTs. A REIT pays dividends from a large, diversified, often liquid portfolio, but REIT shares are securities, not like-kind real property, so they're not 1031-eligible. DST income passes through the grantor-trust structure with depreciation that can shelter part of it, while REIT dividends are mostly ordinary income (with a 20% qualified-REIT-dividend deduction). DSTs are illiquid with a finite hold; many REITs are liquid and perpetual. A 1031-into-DST-then-721-into-REIT path can bridge the two while preserving deferral. So DST cash flow suits 1031 investors wanting deferral and a specific property, while REIT dividends suit investors wanting liquidity and diversification. They serve different goals.
Can I rely on DST income for retirement?
Some retirees use DST income as part of their plan, but it should be approached carefully and never treated as guaranteed. DSTs can offer passive, regular cash flow from professionally managed real estate without landlord duties, which appeals to retirees, and many distribute monthly to mirror living-expense cadence. However, distributions aren't guaranteed — they depend on occupancy, expenses, and debt service and can be reduced or suspended — and DSTs are illiquid with a finite hold, so your capital is committed and the property will eventually sell at full cycle, requiring you to redeploy proceeds. For these reasons, DST income is generally best used as one component of a diversified retirement income strategy rather than a sole source, and only for capital you can leave invested for years. Diversifying across multiple DSTs, asset classes, and sponsors can help. So a DST can contribute to retirement income for a suitable investor, but size it appropriately, diversify, and plan for illiquidity and the eventual full-cycle event — and confirm suitability before investing.
What is a master lease in a DST?
A master lease is a structure many DSTs use to manage the property while respecting the legal restrictions on DST trustees (sometimes called the 'seven deadly sins'), which limit the trustee's ability to actively operate the asset, renegotiate leases, or raise new capital. Under a master lease, the DST leases the entire property to a master tenant — typically an affiliate of the sponsor — which then handles day-to-day operations, leasing, and management, and pays rent up to the DST. This lets the property be actively managed while the DST itself remains a passive holder of real estate, preserving its qualification as like-kind property for 1031 purposes under IRS Revenue Ruling 2004-86. For you as an investor, the master lease is part of why your DST income is passive: the master tenant and sponsor handle operations, and net cash flow flows up to the trust and out to beneficial owners. So a master lease is the operational bridge that lets a DST be both actively managed and a passive, 1031-eligible real estate holding.
How does Baker 1031 help me understand DST income?
We help investors understand DST income — how distributions work, what cash-flow ranges are realistic for different asset classes and leverage levels, why distributions aren't guaranteed, how frequency and timing work, and how current income fits into total return — so you can evaluate offerings with realistic expectations rather than chasing a headline yield. DST interests are securities offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), to accredited investors after a suitability review that considers your financial situation, income needs, time horizon, and risk tolerance. We help you read distribution projections in context — examining tenant quality, lease terms, expenses, leverage, sponsor track record, and asset class — and weigh current income against debt paydown and potential appreciation. Baker 1031 does not provide tax or legal advice; your CPA handles how DST income is reported and taxed. We're candid that distributions are projections, not promises — they depend on occupancy, expenses, and debt service and can be reduced or suspended; returns are never guaranteed, and past performance doesn't guarantee future results.
Glossary
- Delaware Statutory Trust (DST)
- A Delaware-law trust holding income-producing real estate.
- Distribution
- Your proportional share of a DST's net rental cash flow.
- Net Cash Flow
- Rent left after operating expenses and debt service.
- Beneficial Interest
- A fractional ownership share in the DST.
- Cash-on-Cash Rate
- Annual distribution as a percentage of invested equity.
- Leverage
- Non-recourse debt the DST uses to acquire property.
- Debt-Free DST
- An all-cash DST that carries no mortgage.
- Occupancy
- The share of a property that is leased and paying rent.
- Master Lease
- A structure letting a DST be actively managed yet passive.
- Distribution Schedule
- How often a DST pays — usually monthly or quarterly.
- Ramp-Up Period
- The short delay before the first full distribution.
- Total Return
- Income plus debt paydown plus any appreciation.
- Debt Paydown
- Equity built as the property's loan is amortized.
- Full Cycle
- The eventual sale of the DST's property.
- Sponsor
- The firm that structures and manages the DST.
- Non-Recourse Debt
- A loan secured only by the property, not the investors.
Sources & References
- IRS. Revenue Ruling 2004-86
- Cornell Legal Information Institute. 26 U.S. Code § 1031 — Exchange of real property held for productive use or investment
- FINRA. Real Estate Investments
- Cornell Legal Information Institute. 26 U.S. Code § 1014 — Basis of property acquired from a decedent
Disclosures
This article is published by Baker 1031 Investments, LLC for general educational purposes for accredited investors and is not an offer to sell or a solicitation of an offer to buy any security, nor is it tax, legal, accounting, or investment advice or a recommendation. Any securities offering is made solely through a sponsor’s private placement memorandum (PPM) following a suitability determination. Securities offered through Aurora Securities, Inc. (ASI), member FINRA / SIPC; Baker 1031 Investments is independent of ASI.
Oil & gas mineral and royalty interests and DST programs are speculative, illiquid securities sold only to verified accredited investors and involve substantial risk, including possible loss of principal, commodity-price and production-decline risk, lack of control, and the risk that an intended 1031 exchange fails to qualify for tax deferral. Whether a particular interest qualifies as like-kind real property is a fact-specific legal determination that varies by state and by the terms of the instrument. Tax results depend on your individual circumstances. Consult your own CPA and attorney before acting. Past performance does not guarantee future results.
