I’ve been learning a lot about tax strategies lately. The kind that aren’t exactly dinner party conversation (unless you’re at our house), but can make a huge difference when investing in real estate. I thought I had 1031 exchanges figured out pretty well. You exchange one property for another, defer the capital gains tax. Simple enough in theory.

But then last week at a training, I saw 3 letters I had not seen before: DST, short for Delaware Statutory Trust. Honestly, it sounded (sounds?) a little fancy and complicated. But from what I can tell, DSTs could be a solid investment option, especially if you want to invest more passively or diversify without dealing with the day-to-day headaches of owning property.

From what I can tell, a DST is like a REIT on steroids. With a DST, you invest in a piece of a bigger property (like owning a slice of the pie) and you can still get those 1031 exchange tax benefits. It’s not for everyone, you actually have to be a “certified investor” meaning you have $1M in assets, not including your primary, and are approved. But it is truly a passive investing option, taking away the need to deal with those pesky property managers.

I’m still wrapping my head around the details, but if you’re curious about tax-smart ways to invest, DSTs might be worth checking out. I’ll share more once I learn more myself.