To transfer a property into a 1031 Delaware Statutory Trust (DST) with professional help, you are not literally “moving” the real estate into the DST. Instead, you sell your relinquished property and, through a properly structured 1031 exchange, reinvest your sale proceeds into one or more DST interests as your replacement property.
Here is how the process typically works when you use a professional team:
- Confirm your property and goals fit a 1031 DST strategy
A 1031 exchange is generally used for investment or business property, not a personal residence. A professional will help you confirm eligibility, estimate your exchange proceeds, and determine how much replacement property you need to acquire to fully defer taxes (including whether you must replace debt and avoid receiving cash back). - Set up the exchange before you close the sale
Timing and paperwork matter. A Qualified Intermediary (QI) must be engaged before your sale closes, and the sale proceeds must go to the QI, not to you. Your team will coordinate the exchange documents and work with your escrow or closing agent to keep everything compliant. - Sell your relinquished property and place funds with the Qualified Intermediary
At closing, you sell your property as usual, but the net proceeds are wired to the QI. This preserves the tax deferred status of the exchange and prevents “constructive receipt” of funds. - Identify DST replacement properties within 45 days
You must identify your replacement property(ies) within 45 calendar days of closing the sale. With a DST, your professional team will help you review available offerings, compare risk and return assumptions, and build an identification plan (often using multiple DSTs for diversification and to match your exchange amount more precisely). - Complete DST subscription and due diligence
Your professionals will walk you through the private placement memorandum, property level business plan, financing terms, fees, and sponsor track record. You will complete subscription documents, investor suitability items, and select your allocation amount(s). Your team also coordinates with the DST sponsor to confirm funding timelines. - Fund the DST purchase and close within 180 days
Your DST investment is funded from the QI directly to the DST sponsor, and you must complete the purchase within 180 calendar days of your sale closing (or your tax filing deadline, whichever comes first). The professionals coordinate the timing so the investment is accepted and funded properly within the exchange window. - Keep records and plan the next step
After funding, you will retain your exchange documentation and closing statements. Your advisors can also help you plan income expectations, tax reporting, and long-term exit options, including potential future exchanges when the DST sells.
Professional help usually includes:
- Qualified Intermediary to structure and hold exchange proceeds
- 1031 exchange advisor to guide timing, identification, and replacement strategy
- DST specialist to source and compare offerings and explain sponsor terms
- CPA and legal counsel for tax reporting and entity planning as needed