For the accredited investor, a 1031 exchange into a Delaware Statutory Trust begins at a single gatekeeping question: is the accredited investor standard met? DST interests are private placements restricted by law to accredited investors, so the answer determines whether the DST marketplace, for cash investment or as 1031 replacement property, is open at all.
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The threshold question breaks into three parts, each covered in its own brief.
Who Qualifies
The most commonly cited individual test is a net worth exceeding $1 million, excluding the primary residence. Entities such as family LLCs and trusts qualify through gross assets exceeding $5 million or through the accredited status of every underlying owner. Who qualifies as an accredited investor for a DST walks through both tests and the entity routes. Investors should verify their status with qualified legal or financial counsel before initiating a subscription.
Why the Restriction Exists
DST offerings are structured as Regulation D Rule 506(c) private placements, and a DST interest is a security rather than direct real estate ownership. That framework restricts subscription, narrows resale to other accredited investors, and is precisely what enables 1031 like-kind treatment. Why DSTs are available only to accredited investors covers the regulatory architecture.
What Verification Involves
Under Rule 506(c), the standard confirmation is a letter from a licensed CPA, attorney, or registered investment adviser, typically re-verified at each new subscription. Confirmed status unlocks offering materials, including the Private Placement Memorandum, with minimums from $25,000 to a more typical $100,000 floor for exchange investors. What DST accreditation verification actually involves details the sequence.
Accredited investors map their situation against current offerings via the partnered broker-dealer's intake; confirming accreditation is the first step.