1031 Exchange Into a DST
How the Wealthy Use a Little-Known Secret to Avoid Taxes When Selling Real Estate
There’s a myth floating around out there that says, if you sell your residential or commercial property, you have to either find something else to buy through a 1031 exchange and then manage the property yourself – or you have to pay the tax on the capital gains.
The truth is, there’s another, better way – and this strategy could render your real estate tax free… forever.
What is a 1031 Exchange?
A 1031 exchange – named after Section 1031 of the Internal Revenue Code – is a tax-deferral strategy that allows real estate investors to sell an investment property and reinvest the proceeds into a “like-kind” property, deferring capital gains taxes in the process. Instead of paying taxes on the sale, the investor uses the full proceeds to acquire a replacement property, preserving equity and maximizing growth potential.
But in a 1031 exchange, you’re rolling your gain into a new property. That means:
- The replacement property must be identified within 45 days of selling the original property, and the new purchase must be completed within 180 days.
- The exchange must follow strict IRS rules, including using a qualified intermediary to hold the funds during the transaction.
- Both properties must be held for business or investment purposes – personal residences don’t qualify – and “like-kind” doesn’t mean the properties must be identical – just similar in nature or use (e.g., an apartment complex for a commercial building).
What is a DST (Delaware Statutory Trust)?
A Delaware Statutory Trust (DST) is a specific type of investment vehicle, or structure, that can be used to facilitate a 1031 exchange by holding title to investment real estate.
With a DST, multiple investors can pool their money to own fractional interests in large, institutional-quality properties (such as apartment complexes, office buildings, storage units, or industrial facilities just to name a few) without the responsibility or hassle of direct property management.
DST Fees: What Advisors Hope You’ll Never Ask
“How Much Is This Going to Cost Me?”
Most investors don’t ask this question upfront, and brokers and commission-based advisors sure don’t want to hear it.
If you’re considering a DST, you need to know: Are you getting the best deal… or is your advisor?
At Libertas Wealth, we don’t take commissions. We don’t bury fees. In fact, we can’t… as a NAPFA-registered, fee-only fiduciary, we legally cannot accept commissions or kick-backs of any kind.
Instead, we help you find the DST that makes the most sense, charging a simple, flat consulting fee – because that’s how true fiduciaries operate. Every commission that would’ve gone to an advisor? Credited back to you.
Brokers Take Commissions.
Fiduciaries Don’t.
Most financial advisors pushing DSTs aren’t true fiduciaries. They might call themselves “fiduciaries” because big money lobbyists in Washington have influenced changes in the fiduciary law, making it legal to do so… but in our opinion, if they can take commissions, they’re not true fiduciaries. They’re actually brokers – or at best, hybrid brokers, which means:
- They make commissions when you buy. They get paid 6-9% upfront, before your money even starts working for you. That means if you invest $100,000, you’re either starting with $91,000 – 94,000 – or you’re paying $106,000 – 109,000 for the $100,000 DST.
- They aren’t required to act in your best interest. If one DST pays them more than another, there is a conflict of interest to recommend one over the other.
- They won’t break down the fees for you. If they did? …you’d likely walk away.
We do things differently. No commissions. No hidden fees. Just transparent, fiduciary advice. Here’s how it actually breaks down:
How We Compare to Commission-Based Brokers
How we’re paid , and why it benefits you.
DST Fixed Fees
At Libertas Wealth, we operate as a fiduciary… always. That means we cannot and do not accept commissions, revenue-sharing, or dealer concessions of any kind. This is a consulting relationship, designed with your best interest in mind.
Here’s our simple, transparent flat-fee schedule for DST due diligence and planning services:
Traditional brokers and hybrid advisors typically charge a 5% commission, and their broker-dealers add another 1.25% in dealer concession – a total of 6.25% in costs that rise along with the value of your real estate.
Since Libertas Wealth is a NAPFA-registered fiduciary (Fee-Only RIA firm), these costs are eliminated and credited back to you.
Here Are Some Examples
$500,000 Property Sale & 1031 Exchange
- Traditional Fees: $31,250 (6.25%)
- With Libertas:
- Flat Fee: -$7,500
- Credit Returned: +$31,250
- Net Investment: $523,750
$3,000,000 Property Sale & 1031 Exchange
- Traditional Fees: $187,500 (6.25%)
- With Libertas:
- Flat Fee: -$12,500
- Credit Returned: +$187,500
- Net Investment: $3,175,000
$10,000,000 Property Sale & 1031 Exchange
- Traditional Fees: $625,000 (6.25%)
- With Libertas:
- Flat Fee: -$18,000
- Credit Returned: +$625,000
- Net Investment: $10,607,000
Important note: If a client chooses not to move forward with implementation, hourly billing applies at a rate of $400/hr capped at the flat fee amount for the tier in question (above).
So… What should you do?
If you’re already talking to an advisor about DSTs, ask them this one question:
“How much is this going to cost me?”
Chances are, they’ll tell you “It doesn’t cost you anything – it’s built into the price.”
Translation? You’re paying for it, you just don’t see it. That’s the game.
You work too hard to throw away money on commissions and unnecessary fees. If you want an honest, conflict-free discussion about your DST options – without sales pitches, conflicts of interest, or hidden costs – let’s have a real conversation, because your hard-earned money deserves better.
Get a real second opinion, from a true fiduciary.
Are You a Realtor?
Let’s connect for an intro call to explore how we can:
- Deliver engaging CE-eligible education on 1031 Exchanges and DSTs for you and your team,
- Help the people you serve avoid capital gains taxes on real estate sales, while creating steady, passive income solutions, and
- Provide fair, commission-free, fiduciary consulting that keeps their best interests front and center.
You’re the hero at the end of the day – we just take care of the complicated stuff.
By the way… We also offer full-service wealth management and financial planning for clients who want a deeper, long-term relationship with a fiduciary they can trust.
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