One of the practical advantages of using a Delaware Statutory Trust (DST) as 1031 replacement property is how quickly you can close. A conventional property purchase involves finding a deal, negotiating, inspecting, arranging financing, and coordinating a closing — a process that can take months and that rarely fits cleanly inside a 1031 exchange's strict deadlines. A DST is different: the offering is pre-packaged. The sponsor has already acquired the property, arranged the financing, and assembled the offering documents, so what remains for you is a streamlined subscription, not a property closing. Once you've identified the DST within your 45-day identification window, the closing itself often takes only a few days to a couple of weeks. This guide walks through why DSTs close quickly, the document review and signing, funding through your qualified intermediary (QI), receiving your beneficial interest, and a typical timeline. Note that DST interests are securities offered through a broker-dealer to accredited investors after a suitability review, and Baker 1031 does not provide tax or legal advice — verify the current rules and your specific situation with your QI, CPA, and attorney; this is educational information, not investment advice.
Why DSTs Close Quickly
DSTs close quickly because they are pre-packaged investments. When a DST offering comes to market, the sponsor has already done the heavy lifting that makes a conventional real estate closing slow: the property has been acquired, the financing (if any) has been arranged and is in place at the trust level, the title work and appraisals are complete, and the offering documents — the Private Placement Memorandum (PPM), the trust agreement, and the subscription materials — have been drafted and reviewed by counsel. You are not negotiating a purchase or arranging a loan; you are subscribing to a ready-made offering.
This is a fundamental contrast with buying a property directly. In a direct purchase, you must locate a suitable replacement property, negotiate price and terms, conduct due diligence, secure financing, and coordinate a closing — each step introducing delay and uncertainty, and any of them capable of derailing a 1031 exchange that's racing against the 45-day and 180-day clocks. With a DST, those steps were completed before the offering opened, so the burden on you shrinks to reviewing the documents, confirming suitability, signing, and funding through your qualified intermediary. The deal is already assembled; you're stepping into it.
So DSTs close quickly because they are pre-packaged — the property is already acquired and financed, the documents are ready, and the offering is open. Why DSTs close quickly comes down to the sponsor having completed the slow parts of a real estate transaction in advance: acquiring the property, arranging the financing, finishing title and appraisal work, and preparing the PPM and subscription documents, so that your role is reduced to a streamlined subscription rather than a property closing. That pre-packaging is the structural reason a DST can close in days to a couple of weeks rather than the months a conventional purchase often takes. Understanding why DSTs close quickly frames the rest of the process. DSTs close quickly because the offering is pre-packaged: the property is already acquired and financed and the documents are ready, so you subscribe rather than negotiate a purchase.
Document Review & Signing
The first active step in closing a DST is document review and signing. Once you've decided to pursue a particular DST, you receive the offering package — most importantly the Private Placement Memorandum (PPM), which lays out the offering terms, the property and its business plan, the financing, the fees, the tax and legal opinions, and the risk factors. You (ideally with your advisor, CPA, and attorney) review these materials to understand exactly what you're investing in, what it costs, and what risks it carries. This review is the substantive part of the process and shouldn't be rushed simply because the mechanics are fast.
After reviewing the PPM, you complete and sign the subscription agreement — your purchase contract for the beneficial interest. The subscription agreement specifies the dollar amount you're investing, identifies how you'll hold title (which must match the taxpayer that sold the relinquished property), and includes investor suitability representations in which you affirm your accredited-investor status, your risk tolerance, and that you've read the PPM. Because DST interests are securities, this happens through a broker-dealer after a suitability review. Signing the subscription agreement is what commits you to the offering, subject to the sponsor's acceptance.
So document review and signing means reading the PPM carefully and then signing the subscription agreement, your purchase contract for the beneficial interest. Document review and signing — receiving and studying the PPM (offering terms, property, business plan, financing, fees, tax and legal opinions, and risk factors), then completing and signing the subscription agreement that specifies your investment amount, your title-holding, and your suitability representations — is the first active step in a DST closing, conducted through a broker-dealer after a suitability review. It's the substantive part of an otherwise fast process and deserves careful attention. Understanding the document step prepares you for funding. Document review and signing means reading the PPM to understand the offering, then signing the subscription agreement — your purchase contract — including your suitability representations, through a broker-dealer.
The speed of a DST closing is a feature of the structure, not a reason to skim the documents — read the PPM and its risk factors as carefully as you would inspect a property you were buying outright.
Funding Through Your QI
Funding a DST in a 1031 exchange must flow through your qualified intermediary (QI). When you sold your relinquished property, the sale proceeds went to your QI — not to you — to preserve the exchange; if you take actual or constructive receipt of those funds, you blow the 1031 and trigger the tax. To complete the purchase of your DST interest, you instruct your QI to wire the exchange proceeds directly to the DST (or its escrow). The money moves from the QI to the DST, never passing through your hands, which is what keeps the exchange intact.
This is a critical mechanical point that distinguishes a 1031 closing from an ordinary investment purchase. You don't write a check from your own bank account for the exchange portion — the QI does, using the proceeds it's been holding. If you're investing additional cash beyond the exchange proceeds (for example, to cover the full minimum or to replace debt with cash), that additional amount can come from you directly, but the exchange proceeds themselves must originate with the QI. Coordinating the wire — confirming amounts, timing, and instructions among you, the QI, and the sponsor — is the core of the funding step.
So funding through your QI means the exchange proceeds are wired from the QI directly to the DST, never touching your hands, to preserve the 1031. Funding through your QI — instructing your qualified intermediary to wire the exchange proceeds it has been holding directly to the DST or its escrow, so the funds move from the QI to the trust without you ever taking receipt — is the mechanical heart of a DST 1031 closing, because taking constructive receipt of the proceeds would disqualify the exchange. Any additional cash beyond the exchange proceeds can come from you, but the exchange funds must originate with the QI. Understanding the QI funding step protects your deferral. Funding flows through your QI: your qualified intermediary wires the exchange proceeds directly to the DST so the money never touches your hands, preserving the 1031 — only additional cash beyond the proceeds can come from you.
Receiving Your Beneficial Interest
Once your subscription is accepted and your funds are received, you become a beneficial owner of record in the DST. A DST holds the underlying real estate in trust, and investors own fractional beneficial interests in that trust — not deeded fractions of the property itself, but undivided beneficial interests that the IRS treats, under Revenue Ruling 2004-86, as direct interests in real property for 1031 purposes. When the sponsor accepts your subscription and the trust records your interest, your ownership is established, and the sponsor's records (and your closing confirmation) reflect your share of the trust.
From that point, you begin participating in the DST as a beneficial owner: you start receiving your pro-rata share of the trust's distributions (typically paid monthly or quarterly from the property's net rental income), and you become entitled to the annual tax reporting the DST provides — the grantor letter that reports your share of income, expenses, and depreciation. You're now a passive investor in the trust; the trustee and sponsor handle the property and the master lease, while you receive income and reporting. Your 1031 exchange is complete once the replacement (the DST interest) is acquired within the 180-day window.
So receiving your beneficial interest means becoming a beneficial owner of record, beginning to receive distributions, and becoming entitled to the DST's annual tax reporting. Receiving your beneficial interest — becoming a beneficial owner of record once your subscription is accepted and funded, with the trust recording your undivided fractional interest (treated as like-kind real property under Revenue Ruling 2004-86), after which you begin receiving pro-rata distributions from the property's net income and become entitled to the annual grantor-letter tax reporting — completes your entry into the DST. You're now a passive beneficial owner while the trustee and sponsor manage the property. Understanding this step shows what ownership looks like. Receiving your beneficial interest means you become a beneficial owner of record, start receiving pro-rata distributions, and become entitled to the DST's annual grantor-letter tax reporting — completing your 1031 if done within 180 days.
- DSTs close quickly because they're pre-packaged — the property is already acquired and financed and the offering documents are ready.
- You review the PPM and sign the subscription agreement (your purchase contract), which includes your suitability representations.
- Exchange proceeds must be wired from your qualified intermediary directly to the DST — the funds can never touch your hands.
- Once accepted and funded, you become a beneficial owner of record, begin receiving distributions, and get annual grantor-letter reporting.
Typical Timeline
The typical DST closing timeline is measured in days to a couple of weeks once you've identified the offering — dramatically faster than a conventional property closing. After you've identified the DST within your 45-day identification window, the active closing steps are compressed: reviewing the PPM and confirming suitability, signing the subscription agreement, and coordinating the wire from your QI. Because the property is already acquired and financed, there's no loan to underwrite, no inspection period, and no negotiation — the gating factor is simply how quickly you complete the documents and the funds clear.
This speed is precisely why DSTs are so useful inside a 1031 exchange. The exchange imposes hard deadlines: you must identify replacement property within 45 days of selling your relinquished property and complete the acquisition within 180 days. A DST's ability to close in days to a couple of weeks makes it a reliable way to meet those deadlines — and a valuable backup if a primary replacement property falls through late in the exchange, since you can often still subscribe to a DST and close in time. The pre-packaged nature removes the closing risk that can sink a tight exchange.
So the typical DST closing timeline is a few days to a couple of weeks after identification — far faster than a conventional property closing and ideal for meeting 1031 deadlines. The typical timeline — often just a few days to a couple of weeks once you've identified the DST, because the pre-packaged offering has no loan to underwrite, no inspection, and no negotiation, leaving only document review, signing, and the QI wire — makes a DST a reliable way to meet the 1031 exchange's 45-day identification and 180-day completion deadlines, and a valuable backup if a primary replacement property falls through. The speed removes closing risk from a tight exchange. Understanding the timeline shows why DSTs fit 1031s so well. The typical DST closing timeline is a few days to a couple of weeks after identification — fast enough to reliably meet the 45-day and 180-day 1031 deadlines and to serve as a backup when another property falls through.
When a primary replacement property collapses at day 160 of an exchange, a DST is often the only thing that can still close in time — the pre-packaged structure is what makes that rescue possible.
What Can Slow a DST Closing
Although DSTs close quickly, a few things can introduce delay, and it's worth knowing them so you can avoid surprises. The most common is the suitability and accreditation review: because DST interests are securities offered only to accredited investors, your broker-dealer must verify your accredited status and complete the suitability review before your subscription can be accepted. Gathering accreditation documentation (income, net-worth, or third-party verification) ahead of time keeps this from becoming a bottleneck. Incomplete or inconsistent subscription paperwork — a mismatch in how title is held, a missing signature, or unclear entity documentation — can also cause delay.
Funding logistics are another potential source of friction. The wire from your QI must be coordinated precisely — correct amounts, correct instructions, and timing that fits both the QI's processes and the sponsor's closing schedule. If a DST offering is nearly fully subscribed, allocation can also matter: popular offerings can fill up, so confirming availability and reserving your allocation early avoids the risk of the offering closing before your funds arrive. None of these are unique to DSTs, but each can add days, so preparation matters even in a fast process.
So a DST closing can be slowed by accreditation and suitability review, paperwork errors, funding-coordination issues, or an offering filling up — all manageable with preparation. What can slow a DST closing — the accreditation and suitability review required for a securities offering, incomplete or inconsistent subscription paperwork (especially title mismatches), funding-coordination friction with the QI wire, and the risk of a popular offering filling up before your allocation is secured — are the practical frictions to anticipate, even though the structure is inherently fast. Preparing your accreditation documentation, confirming your title-holding, and reserving your allocation early keep the process smooth. Understanding the potential snags helps you avoid them. A DST closing can be slowed by the accreditation and suitability review, paperwork or title-mismatch errors, QI funding coordination, or an offering filling up — all avoidable with preparation.
How Baker 1031 Helps You Close a DST
Baker 1031 Investments helps investors move through the DST closing process — understanding why DSTs close quickly, reviewing the PPM and subscription documents, coordinating the QI funding, and completing the steps to become a beneficial owner of record — so your closing fits inside your 1031 exchange's deadlines without surprises.
DST interests are securities offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), to accredited investors after a suitability review, so we begin by confirming your accreditation and reviewing suitability before any subscription. We help you read and understand the PPM and its risk factors, complete the subscription agreement (including titling that matches the taxpayer who sold the relinquished property), and coordinate with your qualified intermediary so the exchange proceeds are wired correctly from the QI to the DST — preserving your 1031. Baker 1031 does not provide tax or legal advice; your QI handles the exchange mechanics, and your CPA and attorney confirm your title-holding, eligibility, and tax treatment, which can be technical. We help you anticipate what can slow a closing — accreditation documentation, paperwork, funding logistics, and offering availability — and prepare for them. Distributions, yields, and returns are never promised, and past performance does not guarantee future results. Our role is to help you close a suitable DST cleanly and on time, coordinating with your tax and legal professionals.
Frequently Asked Questions
How long does it take to close a DST?
Closing a DST is typically fast — often just a few days to a couple of weeks once you've identified the offering — which is dramatically quicker than a conventional property closing that can take months. The reason is that a DST is pre-packaged: the sponsor has already acquired the property, arranged any financing, completed the title and appraisal work, and prepared the offering documents, so there's no loan to underwrite, no inspection period, and no purchase negotiation. What remains is reviewing the Private Placement Memorandum (PPM), confirming your suitability and accredited status, signing the subscription agreement, and coordinating the wire of exchange proceeds from your qualified intermediary (QI) to the DST. The gating factors are usually how quickly you complete the paperwork and how fast the funds clear. This speed makes DSTs especially useful inside a 1031 exchange, where you face hard 45-day and 180-day deadlines. So a DST can typically close in days to a couple of weeks after identification.
Why do DSTs close so quickly?
DSTs close quickly because they are pre-packaged investments. By the time a DST offering comes to market, the sponsor has already completed the slow parts of a real estate transaction: the property has been acquired, the financing has been arranged and placed at the trust level, the title work and appraisals are done, and the offering documents — the PPM, the trust agreement, and the subscription materials — have been drafted and reviewed by counsel. You are not negotiating a purchase price, conducting a physical inspection, or applying for a mortgage; you are subscribing to a ready-made offering. That contrasts sharply with a direct property purchase, where locating a deal, negotiating, inspecting, securing financing, and coordinating a closing each introduce delay. With a DST, those steps were finished before the offering opened, so your role shrinks to document review, suitability confirmation, signing, and funding through your QI. So the pre-packaged structure is the fundamental reason a DST can close in days rather than months.
What documents do I sign to invest in a DST?
The two central documents are the Private Placement Memorandum (PPM) and the subscription agreement. The PPM is the offering document you review (not sign) — it lays out the offering terms, the property and its business plan, the financing, the fees, the tax and legal opinions, and the risk factors, so you understand exactly what you're investing in. The subscription agreement is your purchase contract, and it's what you sign: it specifies the dollar amount you're investing, identifies how you'll hold title (which must match the taxpayer that sold your relinquished property), and includes investor suitability representations in which you affirm your accredited-investor status, your risk tolerance, and that you've read the PPM. Because DST interests are securities, you complete these through a broker-dealer after a suitability review. There may also be accreditation-verification forms and wire-transfer instructions to complete. So you review the PPM and sign the subscription agreement, the contract that commits you to the offering subject to the sponsor's acceptance.
What is the role of the qualified intermediary in a DST closing?
The qualified intermediary (QI) is essential to a DST closing inside a 1031 exchange because it holds and transfers the exchange proceeds. When you sold your relinquished property, the sale proceeds went to your QI rather than to you — this is required to preserve the exchange, since taking actual or constructive receipt of the funds would disqualify the 1031 and trigger the tax. To complete your DST purchase, you instruct the QI to wire those exchange proceeds directly to the DST or its escrow, so the money moves from the QI to the trust and never passes through your hands. This is a critical mechanical distinction from an ordinary investment: you don't write a check from your own account for the exchange portion. If you're adding cash beyond the exchange proceeds, that extra amount can come from you directly, but the proceeds themselves must originate with the QI. So the QI's role is to hold and wire the exchange funds, keeping your deferral intact.
Can I write my own check to fund a DST in a 1031 exchange?
For the exchange portion, no — the funds must come from your qualified intermediary (QI), not from your own bank account. In a 1031 exchange, the proceeds from selling your relinquished property are held by the QI specifically so you never take actual or constructive receipt of them; if you do, the exchange fails and the capital-gains tax becomes due. To fund the DST, you instruct the QI to wire those held proceeds directly to the DST or its escrow. Writing your own check for the exchange proceeds would defeat the purpose, because it would mean you had received the money. However, if you're investing additional cash beyond the exchange proceeds — for example, to meet the full minimum or to replace debt with cash rather than financing — that additional amount can come directly from you. So the rule is: exchange proceeds flow from the QI, and only supplemental cash above the proceeds can come from your own funds. Coordinate the amounts carefully with your QI and the sponsor.
What does it mean to receive a beneficial interest in a DST?
Receiving a beneficial interest means you become a beneficial owner of record in the trust that holds the real estate. A DST holds the underlying property in trust, and investors own undivided fractional beneficial interests in that trust — not deeded fractions of the property itself, but beneficial interests that the IRS treats, under Revenue Ruling 2004-86, as direct interests in real property for 1031 purposes. When the sponsor accepts your subscription and your funds are received, the trust records your interest and your ownership is established. From that point, you begin receiving your pro-rata share of the trust's distributions — typically paid monthly or quarterly from the property's net rental income — and you become entitled to the DST's annual tax reporting, the grantor letter that reports your share of income, expenses, and depreciation. You're a passive beneficial owner; the trustee and sponsor manage the property and the master lease. So receiving your beneficial interest is the moment you officially become an owner in the DST and start participating in its income and reporting.
Does a DST closing fit inside the 1031 deadlines?
Yes — fitting inside the 1031 deadlines is one of the main reasons investors use DSTs. A 1031 exchange imposes two hard deadlines: you must identify replacement property within 45 days of selling your relinquished property, and you must complete the acquisition within 180 days. A conventional property purchase can struggle to meet these timelines because finding, negotiating, financing, and closing a deal takes time and can fall through. A DST, by contrast, can often close in just a few days to a couple of weeks after you've identified it, because the property is already acquired and financed and the documents are ready. That speed makes a DST a reliable way to complete an exchange on time — and a valuable backup if a primary replacement property collapses late in the process, since you can frequently still subscribe to a DST and close within the 180-day window. So a DST closing fits comfortably inside the 1031 deadlines, removing much of the closing risk from a tight exchange. Confirm timing with your QI.
What can delay a DST closing?
Even though DSTs close quickly, several things can introduce delay. The most common is the accreditation and suitability review: because DST interests are securities offered only to accredited investors, your broker-dealer must verify your accredited status and complete a suitability review before accepting your subscription — so gathering income, net-worth, or third-party verification documentation in advance prevents a bottleneck. Incomplete or inconsistent subscription paperwork can also slow things down, especially a mismatch in how title is held, a missing signature, or unclear entity documentation. Funding logistics are another source of friction: the wire from your QI must be coordinated precisely as to amount, instructions, and timing. Finally, allocation can matter — a popular offering can fill up, so confirming availability and reserving your allocation early avoids the offering closing before your funds arrive. None of these are unique to DSTs, but each can add days. So preparing your documentation, confirming your titling, coordinating the wire, and reserving your allocation early keep the process smooth.
Do I need to be an accredited investor to close a DST?
Yes — DST interests are securities offered under Regulation D, typically to accredited investors, so you generally must be accredited to invest. Accreditation is usually met by income (commonly more than $200,000 individually or $300,000 jointly in each of the prior two years, with a reasonable expectation of the same), by net worth (more than $1 million excluding your primary residence), or by holding certain professional licenses. Because most DSTs are offered under Rule 506(c), the sponsor or broker-dealer must take reasonable steps to verify your accredited status — meaning you provide documentation (tax returns, financial statements, brokerage statements, or a third-party letter from a CPA or attorney) rather than simply self-certifying. This verification is part of the closing process and should be completed early to avoid delay. Beyond accreditation, a suitability review confirms the DST fits your financial situation, goals, and risk tolerance. So you must generally be an accredited investor, and you'll need to verify it, before you can close a DST. Confirm the specific offering's requirements with your broker-dealer.
How do distributions work after I close a DST?
After you close and become a beneficial owner of record, you begin receiving your pro-rata share of the DST's distributions — typically paid monthly or quarterly from the property's net rental income after the trust's expenses and any debt service. The amount you receive reflects your fractional ownership of the trust; a larger investment means a proportionally larger share of the distributions. These distributions are passive income to you — you don't manage the property, and the trustee and sponsor handle operations and the master lease. It's important to understand that distributions are not guaranteed: they depend on the property's actual performance — occupancy, rents, and expenses — and can be reduced or suspended if the property underperforms. The DST's PPM describes the targeted distribution, but a target is not a promise. You'll also receive annual tax reporting via the grantor letter, which reports your share of income, expenses, and depreciation. So after closing, you receive periodic passive distributions tied to the property's performance, plus annual tax reporting — but the income can fluctuate and is never guaranteed.
What is the difference between closing a DST and buying a property directly?
The difference is largely in what's already been done. Buying a property directly requires you to locate a suitable property, negotiate the price and terms, conduct physical and financial due diligence, secure financing (often the longest step), and coordinate a closing — a process that commonly takes months and where any step can derail the deal. Closing a DST is far simpler because the sponsor has already completed all of that: the property is acquired, the financing is in place at the trust level, the title and appraisal work is done, and the offering documents are ready. Your role is reduced to reviewing the PPM, confirming suitability and accreditation, signing the subscription agreement, and funding through your QI. You also receive a passive, fractional beneficial interest rather than a deeded, actively managed property. So closing a DST is a streamlined securities subscription rather than a full real estate transaction — much faster, but also passive, with no control over the specific property. Each approach suits different goals and timelines.
Can a DST serve as a backup if my replacement property falls through?
Yes — using a DST as a backup is a well-established 1031 strategy, precisely because of how quickly a DST can close. In an exchange, you identify replacement property within 45 days, but your primary choice can collapse later — financing falls through, the deal sours, or due diligence reveals a problem — sometimes deep into the 180-day window. If you also identified a DST during your 45-day window (the identification rules let you name multiple properties), you can pivot to it and often still close in time, because the DST is pre-packaged and needs only document review, suitability confirmation, and a QI wire. This makes a DST a kind of insurance policy for an exchange: identifying one as a backup gives you a fallback that can close on short notice and preserve your deferral. So a DST can absolutely serve as a backup replacement property, and many investors deliberately identify one for exactly that reason. Discuss identification strategy with your QI and advisor so the backup is properly named within the 45-day window.
What happens if I take possession of the exchange funds before closing the DST?
If you take actual or constructive receipt of the exchange proceeds before they're reinvested, you generally disqualify the 1031 exchange — and the capital-gains tax (and any depreciation recapture) you were deferring becomes due. This is why the exchange proceeds must be held by your qualified intermediary (QI) from the moment you sell your relinquished property until they're wired directly into the DST. 'Constructive receipt' is broad: it doesn't require the money to literally hit your bank account — having the unrestricted right to access or control the funds can be enough to trigger it. That's the entire reason a QI exists: to hold the funds so you never have that access, preserving the exchange. To fund the DST, you instruct the QI to wire the proceeds to the trust, and the money moves QI-to-DST without touching you. So taking possession of the exchange funds is a serious mistake that can blow the deferral. Always route the proceeds through your QI and confirm the mechanics with the QI before any funds move.
Are there any costs to closing a DST?
DST offerings carry fees, and it's important to understand them before closing — they're disclosed in the PPM. These typically include upfront load and offering costs (such as broker-dealer and selling commissions, dealer-manager fees, and organizational and offering expenses) that reduce the portion of your investment initially deployed into the real estate, as well as ongoing fees (asset-management, administrative, and trustee fees) over the hold, and disposition fees when the property is eventually sold. Because a DST is a pre-packaged securities offering, these fees compensate the sponsor and the broker-dealer for assembling, managing, and distributing the offering. Separately, your qualified intermediary charges a fee for handling the exchange, and your CPA and attorney may charge for their advice. The fees vary by sponsor and offering, so reviewing the fee section of the PPM and understanding the total cost is an essential part of due diligence. So yes, there are costs — offering, ongoing, and disposition fees plus your QI and advisor fees — and you should weigh them carefully against the benefits before closing.
How does Baker 1031 help me close a DST?
We help investors move through the DST closing process — understanding why DSTs close quickly, reviewing the PPM and subscription documents, coordinating the QI funding, and completing the steps to become a beneficial owner of record — so your closing fits inside your 1031 exchange's deadlines without surprises. DST interests are securities offered through the broker-dealer, Aurora Securities, Inc. (member FINRA/SIPC), to accredited investors after a suitability review, so we begin by confirming your accreditation and reviewing suitability before any subscription. We help you read and understand the PPM and its risk factors, complete the subscription agreement (including titling that matches the taxpayer who sold the relinquished property), and coordinate with your qualified intermediary so the exchange proceeds are wired correctly from the QI to the DST. Baker 1031 does not provide tax or legal advice; your QI handles the exchange mechanics, and your CPA and attorney confirm your title-holding, eligibility, and tax treatment. We help you anticipate what can slow a closing and prepare for it. Distributions, yields, and returns are never promised, and past performance doesn't guarantee future results.
Glossary
- Delaware Statutory Trust (DST)
- A trust holding real estate in which investors own 1031-eligible fractional beneficial interests.
- Beneficial Interest
- An undivided fractional interest in the DST, treated as like-kind real property.
- Pre-Packaged Offering
- A DST whose property is already acquired and financed and documents are ready.
- Private Placement Memorandum (PPM)
- The DST's offering document detailing terms, property, fees, and risks.
- Subscription Agreement
- Your purchase contract for a DST beneficial interest.
- Qualified Intermediary (QI)
- The party that holds and wires 1031 exchange proceeds.
- Constructive Receipt
- Having access to exchange funds, which disqualifies a 1031.
- Exchange Proceeds
- The funds from the relinquished-property sale held by the QI.
- 45-Day Identification
- The deadline to identify replacement property in a 1031.
- 180-Day Completion
- The deadline to acquire replacement property in a 1031.
- Accredited Investor
- An investor meeting income or net-worth thresholds for Reg D offerings.
- Suitability Review
- The broker-dealer's assessment that a DST fits the investor.
- Grantor Letter
- The DST's annual statement of your income, expenses, and depreciation.
- Master Lease
- The lease through which a DST's property is operated by the sponsor.
- Trustee
- The party holding legal title to the DST's property for the beneficiaries.
- Revenue Ruling 2004-86
- The IRS ruling making DST interests 1031-eligible like-kind real property.
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
- IRS. Like-Kind Exchanges — Real Estate Tax Tips
- U.S. Securities and Exchange Commission. Investor Bulletin: Accredited Investors and Regulation D
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.
