RENT Magazine Q2 '23

COVERING AN EXCHANGE Another popular use of DST investments comes in the form of providing a cover strategy for leftover equity. Let’s say you sell one property and cannot find a suitable replacement property that uses the full exchange proceeds, and you now have leftover equity you need to place. One of the benefits DSTs can provide you in this situation is the ability to enter one without investing a lot of money. Because DSTs typically do not require you to qualify for a loan or even fill out loan documents, DSTs can create a reliable tool for you to access high-quality real estate investments without having to jump through the hoops of getting approved for a loan.


Because DSTs require a low minimum investment amount (typically $100k), they can be a good way for you to use any extra 1031 Exchange proceeds to avoid having a “boot” to pay taxes on. Placing the leftover exchange proceeds into a DST property can potentially allow you to achieve full tax deferral for your 1031 exchange. Consult your own tax or legal advisor for tax and legal advice.


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