1031 Exchanges, DSTs, and TICs: a Smart Alternative to Owning Rental Property
Savvy investors are moving from rental headaches to tax-sheltered wealth with 1031 exchanges, DSTs, and TIC real estate opportunities.
Owning rental property can seem like the ultimate investment, passive income with no constant effort. But many landlords quickly discover the reality: HOA dues, property taxes, ongoing repairs, and the stress of finding and keeping good tenants. When it’s finally time to sell, a large portion of the profits gets swallowed by capital gains taxes.
That’s why more and more investors are turning to the 1031 exchange, a powerful tax-deferral strategy that allows you to sell an investment property, reinvest the proceeds, and keep your money working for you.
What Is a 1031 Exchange?
How the IRS 1031 Code Defers Capital Gains Taxes
A 1031 exchange, named after Section 1031 of the IRS tax code, lets investors defer capital gains taxes when selling an investment property, as long as the proceeds are reinvested into another qualifying property.
Why Tax Deferral Builds Long-Term Wealth
Instead of losing 30-40% of your equity to taxes, investors can reinvest the full amount. Over time, that deferral compounds into even more equity, continued appreciation and stronger cash flow.
Why Investors Choose DSTs and TICs Over Rental Properties
The Hidden Costs of Direct Property Ownership
Property ownership has limits. A single rental property or even a small portfolio leaves you exposed to vacancy risk and the never-ending responsibilities of being a landlord. One empty unit can wipe out your monthly income and maintenance bills quickly eat into your profits.
Diversification Through Large-Scale Student Housing and Multifamily
In contrast, a 1031 exchange into a DST (Delaware Statutory Trust) or a TIC (Tenant-in-Common) structure opens the door to large-scale student housing or multifamily communities. These properties often have hundreds of units, meaning the income is already diversified. A single vacancy hardly makes a dent.
Passive Income Without the Landlord Stress
Because these properties are run by professional in-house property management teams, you avoid the headaches of maintenance calls, HOA disputes, and late rent. You enjoy monthly income without the hands-on work. Finally, all the reasons you got into real estate investment in the first place.
Upside That Outweighs Direct Control
Professional Property and Construction Management
With a DST or TIC investment, you’re no longer the sole decision-maker. But the trade-off is powerful: properties are managed by professional teams, with costs controlled and operations optimized.
Value-Add Improvements That Drive Higher Returns
In-house construction teams handle renovations and upgrades that attract tenants, raise rents, and boost long-term property value
Equity Growth Through Higher Rents and Resale Values
When properties are sold, those improvements and efficiencies flow back to investors in the form of higher resale prices, additional equity, and stronger overall returns.
How to Start a 1031 Exchange With DST or TIC Investments
The 45-Day and 180-Day Rules Made Simple
Participating in a 1031 exchange into a DST or TIC is simpler than you may think. You sell your property, work with a qualified intermediary, and within 45 days identify replacement properties. From there, you have 180 days to close.
Working With a Qualified Intermediary
A QI guides the process, ensures compliance, and makes the exchange seamless for investors
Compounding Benefits With “Swap Until You Drop”
Investors can repeat this process again and again, deferring taxes indefinitely. Some even use what’s known as the “swap until you drop” strategy, where deferred taxes are eliminated entirely when heirs inherit the property.
The Smarter Path Forward for Real Estate Investors
Tax-Sheltered Income, Stability and Growth
Owning your own rental can tie you down with costs and stress. A 1031 exchange into DSTs and TIC investments offers something different: diversified income streams, professional management, long-term appreciation and powerful tax advantages.
Why More Landlords Are Choosing 1031 Exchanges
For accredited investors ready to trade landlord headaches for steady income and tax-deferred growth, 1031 exchanges provide a smarter, more profitable path forward.
Learn more at icon1031.com.
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