Compare your options after selling investment property

See the five paths side by side, then inspect the tradeoffs that matter for your property, timing, and tolerance for ongoing management.

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Which priority is closest to yours?

Select a priority to highlight one path. This is a planning aid, not a recommendation.

Five paths, compared on the same questions

Question	Direct 1031 property	1031 into a DST	Installment sale	Opportunity Zone fund	Sell outright
Tax timing	Potential deferral when all Section 1031 requirements are met.	A qualifying DST interest may support Section 1031 deferral when the ruling and exchange requirements are met.	Eligible gain is generally recognized as payments arrive; depreciation recapture and interest follow separate rules.	Timing depends on the investment date and current QOZ rules; legacy deferred gain generally becomes includible no later than 2026.	Recognized gain, depreciation-related tax, NIIT, and state tax may be due for the sale year, depending on the facts.
Management	You manage the property or hire a manager.	The sponsor controls property and asset management.	No replacement property to operate.	The fund or project operator manages the investment.	No replacement property or buyer note is required.
Control	High. You choose the asset, financing, tenants, and sale timing.	Low. Investors generally cannot direct leasing, financing, or sale decisions.	You negotiate the note terms, security, rate, and payment schedule with the buyer.	Usually limited and governed by the fund documents.	High control over the after-tax proceeds.
Decision window	Generally 45 days to identify and 180 days to receive replacement property; the tax-return due date can be earlier.	The same deferred-exchange deadlines apply; subscription and suitability review add their own steps.	No 45- or 180-day exchange clock, but the sale and note must be structured correctly.	An eligible gain generally must be invested within the applicable 180-day period.	No replacement-property deadline.
Liquidity	Property sale or refinance is possible, but neither is immediate or guaranteed.	Usually illiquid, with no assured secondary market or early exit.	Payments arrive over time; the note may be difficult or costly to sell.	Long holding periods and private-fund restrictions are common.	Highest immediate flexibility after taxes and transaction costs are paid.
Risk profile	Property, tenant, financing, concentration, and execution risk.	Property, sponsor, leverage, fee, securities, and illiquidity risk; loss of principal is possible.	Buyer default, collateral, interest-rate, inflation, and tax-structure risk.	Fund, development, business, geographic, rule-change, and illiquidity risk.	Tax-estimation, reinvestment, inflation, and market risk after the sale.
Often considered by	Owners who want control, can meet the exchange timetable, and accept direct operating responsibility.	Accredited investors who prioritize passive ownership and accept sponsor control and limited liquidity.	Sellers willing to finance a buyer and trade immediate proceeds for a payment stream.	Long-horizon investors evaluating eligible gain under current and post-2026 Opportunity Zone rules.	Sellers who value simplicity and liquidity more than continued real-estate tax deferral.

Direct 1031 property

Keep direct ownership and operating control while pursuing Section 1031 deferral.

Tax timing: Potential deferral when all Section 1031 requirements are met.
Management: You manage the property or hire a manager.
Control: High. You choose the asset, financing, tenants, and sale timing.
Decision window: Generally 45 days to identify and 180 days to receive replacement property; the tax-return due date can be earlier.
Liquidity: Property sale or refinance is possible, but neither is immediate or guaranteed.
Risk profile: Property, tenant, financing, concentration, and execution risk.
Often considered by: Owners who want control, can meet the exchange timetable, and accept direct operating responsibility.

1031 into a DST

Exchange into a fractional interest in real estate managed by a sponsor.

Tax timing: A qualifying DST interest may support Section 1031 deferral when the ruling and exchange requirements are met.
Management: The sponsor controls property and asset management.
Control: Low. Investors generally cannot direct leasing, financing, or sale decisions.
Decision window: The same deferred-exchange deadlines apply; subscription and suitability review add their own steps.
Liquidity: Usually illiquid, with no assured secondary market or early exit.
Risk profile: Property, sponsor, leverage, fee, securities, and illiquidity risk; loss of principal is possible.
Often considered by: Accredited investors who prioritize passive ownership and accept sponsor control and limited liquidity.

Installment sale

Receive at least one payment after the sale year and recognize eligible gain over time.

Tax timing: Eligible gain is generally recognized as payments arrive; depreciation recapture and interest follow separate rules.
Management: No replacement property to operate.
Control: You negotiate the note terms, security, rate, and payment schedule with the buyer.
Decision window: No 45- or 180-day exchange clock, but the sale and note must be structured correctly.
Liquidity: Payments arrive over time; the note may be difficult or costly to sell.
Risk profile: Buyer default, collateral, interest-rate, inflation, and tax-structure risk.
Often considered by: Sellers willing to finance a buyer and trade immediate proceeds for a payment stream.

Opportunity Zone fund

Invest eligible gain in a Qualified Opportunity Fund under a separate tax regime.

Tax timing: Timing depends on the investment date and current QOZ rules; legacy deferred gain generally becomes includible no later than 2026.
Management: The fund or project operator manages the investment.
Control: Usually limited and governed by the fund documents.
Decision window: An eligible gain generally must be invested within the applicable 180-day period.
Liquidity: Long holding periods and private-fund restrictions are common.
Risk profile: Fund, development, business, geographic, rule-change, and illiquidity risk.
Often considered by: Long-horizon investors evaluating eligible gain under current and post-2026 Opportunity Zone rules.

Sell outright

Recognize the sale now and keep the after-tax proceeds unconstrained by an exchange.

Tax timing: Recognized gain, depreciation-related tax, NIIT, and state tax may be due for the sale year, depending on the facts.
Management: No replacement property or buyer note is required.
Control: High control over the after-tax proceeds.
Decision window: No replacement-property deadline.
Liquidity: Highest immediate flexibility after taxes and transaction costs are paid.
Risk profile: Tax-estimation, reinvestment, inflation, and market risk after the sale.
Often considered by: Sellers who value simplicity and liquidity more than continued real-estate tax deferral.

Tax results depend on basis, depreciation, debt, state law, ownership, transaction structure, dates, and other facts. Confirm the current rules with a CPA, tax attorney, and qualified intermediary before acting.

What each path asks you to trade

Direct 1031 propertyKeep direct ownership and operating control while pursuing Section 1031 deferral.

Maximum control over the replacement property
Strict identification and completion deadlines
Concentrated exposure unless multiple properties are acquired

1031 into a DSTExchange into a fractional interest in real estate managed by a sponsor.

No day-to-day landlord work
Sponsor decisions and embedded fees affect outcomes
Private-security restrictions and illiquidity require careful review

Installment saleReceive at least one payment after the sale year and recognize eligible gain over time.

Can spread eligible gain recognition across payment years
Depreciation recapture may still be due in the sale year
Seller assumes meaningful buyer credit risk

Opportunity Zone fundInvest eligible gain in a Qualified Opportunity Fund under a separate tax regime.

Can apply to certain eligible gains beyond real-estate sales
Rules differ for legacy and post-2026 investments
Tax benefits depend on compliance and holding period

Sell outrightRecognize the sale now and keep the after-tax proceeds unconstrained by an exchange.

No exchange or replacement-property constraints
Immediate tax can materially reduce reinvestable capital
Creates freedom to leave real estate entirely

Compare actual active DST offerings

Use the directory when a DST is one of the paths still under consideration. Review the sponsor, filing history, leverage, sources, and offering record—not only the structure.

Open the DST directory

Frequently asked questions

What is a 1031 exchange?

A Section 1031 exchange can defer recognition of gain when qualifying business or investment real property is exchanged for like-kind real property and the other requirements are met. In a deferred exchange, replacement property generally must be identified within 45 days and received within 180 days or the tax-return due date, if earlier.

Can a DST qualify as replacement property in a 1031 exchange?

An interest in a Delaware statutory trust structured consistently with IRS Revenue Ruling 2004-86 may qualify, if the other Section 1031 requirements are satisfied. Not every trust or fractional investment qualifies.

How does an installment sale change when tax is paid?

An eligible installment sale generally recognizes part of the gain as payments are received. Depreciation recapture and interest have separate rules, and buyer credit risk remains with the seller.

Is an Opportunity Zone fund the same as a 1031 exchange?

No. A Qualified Opportunity Fund follows a separate tax regime, can accept certain eligible gains beyond real-estate gains, and has different timing, holding-period, investment, and reporting rules. Opportunity Zone law is changing for investments made after 2026.