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Comparing DSTs to TICs In A 1031 Exchange

When it comes to investing in real estate, many savvy investors understand the benefits of fractional or co-ownership arrangements. Less day-to-day management responsibilities, bigger and better investment properties become available to them, and they can diversify their investment portfolios beyond traditional single-owner properties.

But when an investor is ready to make the leap from single-ownership property to either a Tenancy In Common (TIC) or Delaware Statutory Trust (DST), the investor may be confused with the differences between the two. Here is a quick side-by-side comparison to clear things up.

DST Structure TIC Structure
IRS Reference Rev. Ruling 2004-86 Rev. Procedure 2002-22
# of Investors 499 max. 35 max.
Ownership interest Proportional in the DST itself, none in the actual property Direct ownership of property as
Who Holds Deed? The Trust Individual Owners
Major Decision Approval Owners – None. Yes. Unanimous approval required.
# of Borrowers One (the DST itself) Each investor.
Personal Liability Protection Yes No – unless interest is held via LLC.