Can I do a 1031 into a DST with only $100k?

The minimum is set by each offering, and $100,000 clears most of them

No tax rule sets a DST minimum. A trust that follows Rev. Rul. 2004-86 is a grantor trust, and each beneficial owner is treated as owning an undivided fractional interest in the real estate, so a $100,000 interest is real property for exchange purposes just as a $1 million interest is.

The floor comes from the sponsor and is disclosed in Item 14 of the Form D notice the offering files with the SEC. Recent filings show the spread: a build-to-rent trust at $25,000, an apartment trust at $50,000, an infrastructure trust at $100,000, a healthcare trust at $150,000 and an industrial trust at $500,000.

The sizing question for larger exchanges is covered in DST minimums and sizing. For a $100,000 exchanger the practical rule is simpler: read Item 14 before you put a trust on your identification list.

Accreditation and the three-property rule matter more than the dollar figure

Almost every DST is sold under Regulation D only to accredited investors. Under 17 CFR 230.501(a) that means a net worth over $1,000,000 excluding your primary residence, or income over $200,000 in each of the last two years ($300,000 with a spouse or spousal equivalent). A small exchange does not change that test. If you do not meet it, see replacement options if you are not accredited.

The identification rules in Reg. section 1.1031(k)-1(c)(4) let you name three properties of any value, or more if their total stays within 200% of what you sold. With $100,000 and $50,000 minimums you can close on two trusts at most. Most small exchangers end up in one or two.

That concentration is the real cost of a small exchange. A single trust usually means one sponsor and one lender, and often one tenant or one building. Weigh that against how DST diversification works before you treat a trust as a safer place for your money than a rental house.

Worked example: $100,000 of equity has to carry the old mortgage too

Hypothetical, round numbers; run your own numbers with your CPA. You sell a rental for $400,000 net of costs, pay off a $300,000 mortgage, and $100,000 lands with your qualified intermediary. To defer all the gain you must buy at least $400,000 of replacement property and take on at least $300,000 of debt, or add cash to make up the difference.

Reg. section 1.1031(d)-2 nets the debt you are relieved of against the debt you take on, and cash you put in also offsets it. Buy a $100,000 interest in a trust with a 50% loan and your share is $200,000 of property carrying $100,000 of debt. That leaves $200,000 of net debt relief, and it is taxed as boot.

Buy the same $100,000 interest in a trust financed at 75% and your share is $400,000 of property carrying $300,000 of debt, which matches what you gave up. How the trust's loan is allocated to you is explained in whether a DST's loan counts as replacement debt.

• A free-and-clear sale has no debt to replace, so any trust leverage works, including none.
• A heavily mortgaged sale narrows the list to trusts whose loan-to-value matches your old ratio.
• Adding your own cash at closing offsets debt relief dollar for dollar.

Loads scale with your check, but fixed costs do not

Form D Item 15 shows estimated sales commissions for the whole raise. Across the same filings the figure runs from about 5% of the offering to 10%. In one industrial portfolio trust it was 9%: 6% selling commissions, plus 1% each for due diligence, wholesaling and the managing broker-dealer, with a sponsor fee and offering expenses on top.

Those loads are built into the price of each interest, so a $100,000 investor bears them at the same rate as a large one. What does not scale is anything charged per exchange, such as your intermediary's fee and your own CPA's time. On a small exchange those flat costs are a bigger share of the tax you are deferring. The full fee stack is in DST fees and loads.

What to do if $100,000 is your whole exchange

First, confirm the deferred tax is worth the illiquidity. A DST cannot be sold back to the sponsor on demand, and with $100,000 a forced sale on the secondary market can cost more than the tax you saved; whether a small gain is worth a 1031 runs that test.

If it is worth it, list two or three trusts whose minimums and leverage fit your numbers, then subscribe to the one that still has room when you are ready. Ask whether the offering accepts amounts above the minimum in any increment, because an exact-dollar subscription leaves no leftover cash to be taxed.