1031 exchange and DST terms, defined
Short definitions of the words a 1031 exchange and a Delaware Statutory Trust offering use. Top1031’s own counting terms and the Sponsor Grade terms are defined the way this site uses them, and each term links to its full guide.
180-Day Exchange Period
The exchange period is the time you have to receive the replacement property. It ends at midnight on the earlier of the 180th day after the relinquished property transfers or the due date, including extensions, of your tax return for the year of that transfer [1][2]. For a sale late in the year, the return due date can come first, so extending the return keeps the full 180 days.
45-Day Identification Period
The identification period starts when the relinquished property transfers and ends at midnight on the 45th day after [1]. By then you must name your replacement property in a written document you sign, describe it unambiguously (for real estate, a legal description, street address or distinguishable name), and deliver it to the person obligated to transfer the replacement property to you, or to another person involved in the exchange, such as the qualified intermediary, who is not you or a disqualified person [2].
721 Exchange (UPREIT Contribution)
Section 721 of the Internal Revenue Code lets a person contribute property to a partnership in exchange for a partnership interest without recognizing gain or loss on the contribution [1].
An Umbrella Partnership Real Estate Investment Trust (UPREIT) is built on this rule. An operating partnership holds the real estate, a REIT sits above it as general partner, and a contributor receives operating-partnership (OP) units instead of cash.
In the 1031 DST context, a "721 exchange" or "UPREIT exit" describes a two-step sequence: an investor first exchanges appreciated property into a DST interest under Section 1031, and the DST's sponsor later contributes the underlying property, or the investor's interest, to an UPREIT's operating partnership under Section 721, converting the holding into OP units.
That second step is not itself a like-kind exchange. Moving into OP units generally ends the ability to defer further gain through a future exchange on that equity, though OP units are typically convertible to REIT shares on terms the sponsor discloses at the time of the offer.
Accredited Investor
An investor who meets one of the SEC's wealth, income, or professional-knowledge tests under Rule 501(a) of Regulation D — for a natural person, generally a net worth over $1 million excluding a primary residence, or individual income over $200,000 (or joint income over $300,000) in each of the two most recent years [1]. Most DST offerings are sold under the Regulation D exemptions (Rule 506(b) or 506(c)) that this directory's Form D data reflects, and those exemptions generally limit or restrict the offering to accredited investors rather than the general public.
Active
Offerings Top1031 classifies as Active from SEC filings and cited sources. Offerings the source record identifies as fully subscribed are counted separately. Active does not confirm that interests remain available.
Boot (1031 Exchange)
"Boot" is money or non-like-kind property received by a seller in an otherwise like-kind exchange under IRC Section 1031. Receiving boot does not disqualify the exchange, but the amount of boot received is generally taxable as gain in the year the exchange closes, up to the amount of realized gain [1].
Common sources of boot include cash taken out of the transaction, debt relief where the replacement property carries a smaller mortgage than the relinquished property, or the receipt of property that isn't considered like-kind real estate.
Completed sales
Completed sales are validated completed property-sale Programs with a deciding document identifying the Program or explicitly matching its property. A Sponsor publication, prior-performance schedule, deed, SEC disposition filing, or supported transaction report can establish a sale. A Form D, acquisition, Offering sellout, or generic portfolio page alone cannot.
Constructive Receipt
Constructive receipt means sale proceeds are treated as yours once they are credited to your account, set apart for you or otherwise made available so you can draw on them, even if you never touch them [1]. If you actually or constructively receive money before you receive the replacement property, gain may be taxed; if you receive the full sale price that way, the transaction is a sale, not a deferred exchange [1].
The qualified intermediary safe harbor avoids this: the exchange agreement must bar you from receiving, pledging, borrowing or otherwise getting the benefit of the funds before the exchange period ends, except in the limited cases the regulation allows [1].
Counted Programs
Counted Programs equals Completed sales plus Losses or impairments. Each CIK counts once. A qualifying loss takes precedence over a sale. Conversions, partial sales and unresolved sale identities receive no completed-sale credit.
Delaware Statutory Trust (DST)
A Delaware Statutory Trust is a trust formed under Delaware's Statutory Trust Act [1]. In a 1031 DST, the trust holds title to the real estate and investors own beneficial interests in the trust [2]. Under Rev. Rul. 2004-86, a DST whose trustee has no power to vary the investment is treated as a trust for tax purposes, so a taxpayer can exchange real property for a DST interest under Section 1031 if the other Section 1031 requirements are met [2].
DST interests are sold as securities: a private offering that relies on Rule 506 must file a Form D notice with the SEC within 15 calendar days after its first sale [3].
Depreciation Recapture
Depreciation recapture is the tax rule that turns previously deducted depreciation back into taxable gain when depreciable real property is sold [1].
Over a holding period, an owner deducts depreciation against ordinary income each year. On sale, the portion of gain attributable to that depreciation is taxed differently than the rest of the gain.
For real property, the recaptured portion is commonly called unrecaptured Section 1250 gain and is taxed at a maximum federal rate of 25%, above the standard long-term capital-gains rate but below ordinary income rates [1].
A completed 1031 exchange, including an exchange into a DST interest, defers this recapture along with the rest of the gain rather than erasing it. The deferred depreciation carries forward into the replacement property's basis and becomes taxable again on a future sale that is not itself part of a like-kind exchange.
Form 8824
Form 8824 is the IRS form for reporting a like-kind exchange. You file it with your return for the tax year in which you transferred the relinquished property, and again for the two years after a related-party exchange [1].
Form D and Regulation D
Regulation D is the set of SEC rules that let a company raise capital without registering the securities offering with the SEC, so long as it satisfies specific conditions on investor eligibility, advertising, and disclosure [1]. Most DST offerings on this site are private placements sold under Regulation D, most commonly Rule 506(b) or Rule 506(c), and are limited to accredited investors.
Form D is the notice of exempt offering of securities that an issuer files with the SEC when it raises capital under a Regulation D exemption, including the Rule 506(b) and 506(c) exemptions nearly all DST sponsors use [1]. It discloses the issuer, the offering amount, the minimum investment, the exemption claimed, and the sales-commission structure, and it is amended as the raise progresses. It is a post-sale notice, not a pre-approval application: it is generally due within 15 days of the first sale, and amendments follow the same filing process [2].
Form D does not disclose the property behind an offering, its lease terms, or its projected or historical returns. Those disclosures, when a sponsor makes them, live in the offering documents, which are not filed with the SEC and are not public.
A Regulation D exemption changes how an offering is sold. It says nothing about management quality or outcome, and it carries no scoring of its own.
Full Cycle
A DST program is described as "full cycle" once its underlying property has been disposed of and the trust's investors' beneficial interests come to an end — the holding period is over and the vehicle stops existing as an active investment. A program can go full cycle two structurally different ways: a straight sale of the property, which can become the relinquished property in a new exchange for investors who keep exchanging, or a contribution of the property into a REIT's operating partnership under Internal Revenue Code Section 721 [1]. The label describes that the holding period ended — it is not, by itself, a statement about investment performance.
Identification Rules (3-Property, 200% and 95%)
The identification rules limit how many replacement properties you can name in the 45-day period. Under the 3-property rule you may name any three properties regardless of value; under the 200% rule you may name any number whose combined fair market value is no more than 200% of the relinquished property's value [1].
If you name more than either rule allows, the identification still counts for property you received within the 45 days, and the 95% rule saves the rest only if you receive identified property worth at least 95% of the combined value of everything you identified [1].
Improvement Exchange
An improvement (or build-to-suit) exchange uses exchange funds to build on or improve the replacement property before you take title. Under Rev. Proc. 2000-37, an exchange accommodation titleholder can hold the property while you supervise the work or act as contractor [1]. Only construction completed when you receive the property counts as like-kind replacement property, and only to the extent it is real property under local law; work done after that does not [2].
The identification must give a legal description of the land and as much detail about the planned improvements as is practical at the time [2]. The safe harbor does not cover building on property you owned in the 180 days before the titleholder took title [3].
Like-Kind Property
Like-kind property is real property held for business use or investment that can be exchanged for other such real property without recognizing gain [1]. "Like kind" refers to the nature or character of the property, not its grade or quality, so land, a building, a ranch or a lease with 30 or more years left to run are all like kind to each other [2].
Since 2018, only real property qualifies [1]. Real property means land and improvements to land, unsevered natural products of land, and the water and air space above it [3]. Property held primarily for sale does not qualify, and U.S. real property is not like kind to real property outside the United States [1].
Losses or impairments
Losses or impairments are Programs meeting the documented capital-loss rules. Bankruptcy or receivership can establish impaired capital while proceedings continue; it does not mean the final investor loss is already known.
Master Tenant
A master tenant is the entity, typically a sponsor affiliate though occasionally an independent third-party operator, that leases an entire property from a Delaware statutory trust under a single master lease, then subleases individual spaces to the property's actual occupants. The structure keeps the trust from renegotiating or signing new leases directly after a 1031 exchange offering closes, since IRS guidance restricts a trust's own leasing activity while allowing this master-lease arrangement to sit between the trust and its tenants[1]. A master tenant's financial condition is a separate fact from the trust's title to the underlying real estate.
Net Investment Income Tax (NIIT)
The Net Investment Income Tax is a 3.8% federal tax under Internal Revenue Code Section 1411 on certain income of individuals, estates, and trusts whose income exceeds statutory thresholds [1].
It has applied since 2013 and is reported on Form 8960 [1]. The tax applies to the lesser of an investor's net investment income for the year or the amount by which modified adjusted gross income exceeds the applicable threshold, and the thresholds are not indexed for inflation [2].
Net investment income generally includes interest, dividends, capital gains, and rental or royalty income that is not derived from an active trade or business.
Because most DST interests are passive rental real estate holdings, income and gain passed through to investors is typically net investment income for this purpose. A 1031 exchange that defers capital gain, including an exchange into a DST, also defers the tax that would otherwise apply to that gain in the year of sale.
NR (not rated)
Fewer than three Counted Programs. One recent impairment can therefore remain NR; its evidence is still shown.
Offering documents
Unlike a Form D, a DST's offering documents are not filed with the SEC and are not public, so its contents are not independently verifiable from the public record.
Because offering documents sit outside EDGAR, a Trust's original distribution terms and target hold period are typically undocumented on the public record once an offering has moved past its initial marketing. Top1031's filing-based fields describe what the Form D discloses; they do not restate figures from offering documents the site cannot verify.
DST due diligence checklist: what to read in the offering documents
One Big Beautiful Bill Act (OBBBA)
The One Big Beautiful Bill Act (OBBBA) is a broad federal tax package signed into law on July 4, 2025 [1]. For 1031 exchanges, its relevant effect was what it left unchanged: Section 1031 like-kind exchanges for real property came through fully intact, with no new dollar cap, income limit, or transaction limit added [1]. That mattered because prior federal budget proposals, including a Biden-era plan to cap 1031 deferral at $500,000 per taxpayer per year, had targeted the provision in earlier years without becoming law [2].
The law separately reshaped the Qualified Opportunity Zone program going forward, though it did not restore that program's expired basis step-ups; see Top1031's Opportunity Zone update for the details.
As of the Federation of Exchange Accommodators' (FEA) April 2026 Capitol Hill update, the most recent public status check available, no active legislation would further change Section 1031 for real estate [2].
Program
One DST offering viewed from its Sponsor's track record. A Sponsor's Programs on record are the offerings linked to it in SEC filings, including offerings that have no public Top1031 record.
Published offering record
Every offering with a public Top1031 record: Active, recently fully subscribed and historical.
Qualified Intermediary (QI)
A Qualified Intermediary (QI) is the independent third party required to facilitate a 1031 exchange. The QI receives the proceeds from the sale of the relinquished property, holds them outside the exchanger's control, and uses them to acquire the replacement property or DST interest identified within the 45-day window [1].
An exchanger who receives sale proceeds directly, even briefly, disqualifies the exchange under the constructive-receipt rule, which is why the QI must be engaged before the relinquished property closes.
Recently fully subscribed
Offerings in the Active window whose source record says they are fully subscribed. They are shown separately and are not counted as Active.
Record Card
Each Sponsor's Card shows its letter or NR, literal reason, Completed sales, Losses or impairments and Counted Programs. The detailed category record includes Sponsor-reported results, conversions and Programs with no recorded outcome, with deciding documents beside the figures.
Relinquished Property
Relinquished property is the property you give up in a 1031 exchange: the business or investment property you sell [1]. The day it transfers starts both the 45-day identification period and the 180-day exchange period [1].
Replacement Property
Replacement property is the like-kind property you receive in a 1031 exchange and hold for business use or investment [1]. In a deferred exchange it must be identified within 45 days and received within the exchange period, or it is treated as property that is not like kind [2]. A DST interest can serve as replacement property [3].
Rev. Rul. 2004-86
Rev. Rul. 2004-86 is the 2004 IRS ruling holding that a taxpayer may exchange real property for an interest in a Delaware statutory trust without recognizing gain under Section 1031, if the other Section 1031 requirements are met [1]. It applies to a trust whose trustee has no power to vary the investment [1].
In the ruling, the trustee may not take on new property or new capital, renegotiate the loan, renegotiate the lease or sign new leases (except on a tenant's bankruptcy or insolvency), make more than minor non-structural changes, or invest cash in anything but short-term U.S. government obligations or bank certificates of deposit [1]. The industry calls these limits the "seven deadly sins" [2]; the ruling does not use the phrase.
Reverse Exchange
A reverse exchange buys the replacement property before the relinquished property is sold. Under the Rev. Proc. 2000-37 safe harbor, an exchange accommodation titleholder (EAT) holds title to one of the properties; you sign a written agreement with the EAT within five business days of it taking title and finish the exchange within 180 days. When the EAT holds the replacement property, you must identify the relinquished property within 45 days [1].
Rev. Proc. 2004-51 removes the safe harbor for replacement property you owned at any time in the 180 days before the EAT took title [2].
Sponsor Grade
The Top1031 Sponsor Grade summarizes a Sponsor's completed property-sale experience and documented capital losses or impairments. It is not a rating of an Offering, a recommendation, or a forecast.
Stepped-Up Basis
Stepped-up basis is the rule that an heir's basis in inherited property equals its fair market value at the owner's date of death, or at the alternate valuation date if the estate elects it [1]. Gain deferred through earlier 1031 exchanges sits in the old basis, so it is not taxed if the heir sells at that stepped-up value [1][2].
Tenancy in Common (TIC)
Tenancy in common is co-ownership in which each owner holds an undivided fractional interest in the real estate directly in title [1]. Rev. Proc. 2002-22 sets the conditions under which the IRS will consider a request to rule that a TIC interest in rental real property is not an interest in a business entity, which would not be eligible for a 1031 exchange; one condition is no more than 35 co-owners, counting a married couple as one [1].
Zero-Coupon DST
A zero-coupon DST is a Delaware Statutory Trust structured so that essentially all property-level cash flow pays down the trust's debt rather than funding investor distributions during the holding period.
Sponsors typically build these around a single property leased to an investment-grade tenant on a long primary term, and market the structure as a way to replace debt on a relinquished property in a 1031 exchange without the investor personally guaranteeing or servicing new mortgage debt.
Because the trust itself carries the loan, a zero-coupon structure still depends on the same safe-harbor conditions that keep any Delaware Statutory Trust eligible as 1031 replacement property, including the rule that a trustee cannot renegotiate or refinance a loan once an offering is closed [1].
A zero-coupon structure changes when cash reaches the investor, not whether tax follows the trust's income. Investors typically owe tax each year on their pro-rata share of the trust's taxable income even when they receive no distribution, because debt paydown reduces deductible mortgage interest over time.