Dst Vs Tic

DST versus TIC compares the two principal fractional-ownership structures used to acquire replacement property in a 1031 exchange: the Delaware Statutory Trust (DST) and the tenancy-in-common (TIC). Both let multiple investors own institutional-quality real estate together and both can qualify as like-kind replacement property, but they differ in important ways. In a TIC, each investor holds direct, separate title to an undivided fractional interest in the property and is a co-owner with voting rights on major decisions; the IRS limits respected TIC arrangements (under Revenue Procedure 2002-22) and lenders typically cap co-owners at 35, often requiring each to qualify on the loan, which makes financing and decision-making cumbersome and prone to deadlock. In a DST, investors hold beneficial interests in a trust that owns the property; the trustee makes all decisions, the property-level non-recourse debt is arranged at the trust level so individual investors need not qualify for or sign the loan, and the number of investors can be far larger, allowing smaller minimum investments. Revenue Ruling 2004-86 established DST eligibility for 1031 exchanges, and DSTs have largely displaced TICs because they avoid the unanimous-consent and lender-complexity problems. TICs may still suit investors who want direct control and a vote on major decisions, while DSTs suit those seeking truly passive ownership, easier financing, and lower minimums. Each carries distinct liquidity, control, and risk trade-offs.