A Delaware Statutory Trust can be utilized for a like kind exchange and qualifies for IRS Section 1031. A DST is a securitized portfolio of real estate where each investor owns a beneficial interest in the trust. Unlike ordinary exchanges investors are not burdened with management responsibilities and oftentimes receive a higher cash flow.

A 1031 like-kind exchange is named after Section 1031 of the Internal Revenue Code and when completed properly, it allows investors to defer the payment of capital gain taxes on the sale of investment properties. Investors are able to defer the payment of any capital gain taxes if they properly roll the proceeds from the sale into a like-kind property of equal or greater value.

The IRS has approved the use of DSTs for 1031 like-kind exchanges. As a result, investors looking to get out of managing investment properties can now exchange the proceeds from their investment properties into a DST. Using a DST for a 1031 like-kind exchange provides the same benefits as any other like-kind properties of equal or lesser value. Therefore, investors looking for a passive investment can now defer paying any capital gains on the sale of their investment properties and diversify out of the residential market into many types of real estate asset classes.