Question 1

What is a Delaware Statutory Trust (DST)?

Accepted Answer

A Delaware Statutory Trust (DST) is a legal entity that holds institutional real estate and qualifies as like-kind property under IRS Revenue Ruling 2004-86, allowing investors to use it as replacement property in a 1031 exchange to defer capital gains taxes.

Question 2

How does a 1031 exchange work with a DST?

Accepted Answer

When you sell an investment property, the proceeds go to a qualified intermediary. Within 45 days you identify a DST as your replacement property, and within 180 days the intermediary funds your beneficial interest in the trust — deferring all capital gains taxes.

Question 3

Does Madrona Financial offer DST advisory in Seattle?

Accepted Answer

Yes. Madrona Financial is a Seattle-based fee-only fiduciary firm that advises clients on Delaware Statutory Trusts, 1031 exchanges, real estate investing, wealth management, and tax planning — with no commissions and no conflicts of interest.

Question 4

What is the difference between a DST and a REIT?

Accepted Answer

A DST (Delaware Statutory Trust) allows direct fractional ownership of specific institutional real estate and qualifies for 1031 exchange treatment. A REIT (Real Estate Investment Trust) is a publicly traded or private fund that owns a portfolio of properties and does not qualify for 1031 exchange deferral, though DSTs can convert to REITs via a 721 UPREIT exchange.