Delaware Statutory Trust DST 1031 Replacement Calculator
A Delaware statutory trust (DST) interest can be received as replacement property in a section 1031 like-kind exchange under the facts described in IRS Revenue Ruling 2004-86. This calculator estimates the federal tax that a sale would otherwise trigger, and the cash distributions from a DST at the yield and load fee you enter. Yield and fees come from the offering documents; none are assumed here.
DSTs and Section 1031
Section 1031 provides that no gain or loss is recognised when real property held for investment or business use is exchanged solely for like-kind property held for the same purpose. In Revenue Ruling 2004-86 the IRS concluded that, on the facts described in the ruling, a taxpayer may exchange real property for an interest in a Delaware statutory trust without recognition of gain or loss under section 1031. The ruling depends on limits on what the trustee may do, so each offering needs its own tax opinion.
The Tax Estimate
The IRS states that a 20% capital gains rate applies to the extent taxable income exceeds the thresholds for the 15% rate, and that the portion of any unrecaptured section 1250 gain from selling real property is taxed at a maximum 25% rate. A 3.8% net investment income tax applies to individuals above the statutory income thresholds ($250,000 married filing jointly, $200,000 single). This calculator applies your chosen rate plus 3.8% to the whole gain as a rough estimate. Example: a $450,000 gain at 20% + 3.8% = $107,100.
Load Fee and Distributions
The load fee you enter is deducted from the sale proceeds, and the yield is applied to what remains. With $850,000 of proceeds, a 6% load and a 5.5% yield: $799,000 invested, $43,945 a year. Note that in an exchange, proceeds not reinvested in replacement property can themselves be taxable; ask the sponsor how fees are treated.
Source and Disclaimer
DST interests are illiquid investments with sponsor and property risk. General information, not tax or investment advice.
Source: IRS Revenue Ruling 2004-86; IRS Topic 409, Capital gains and losses; IRS — Net Investment Income Tax. Last updated: October 2026.