The short answer
Yes. With a direct title security you own the property through your own single-member LLC, with no co-owners and no sponsor-led exit, so you decide when to sell, refinance, exchange again or move into a 721 exchange. That is the core difference from a DST, where the sponsor decides when the property is sold. The practical limits come from the documents attached to the house, the tenant's lease and any loan, and from tax: the property must have been held for investment for the next sale to qualify for another exchange.
At a glance
| Who decides | You, as the sole member of the LLC that holds title |
|---|---|
| Co-owner or sponsor vote | None |
| Lease | Stays in place for its term unless its terms say otherwise |
| Loan | Prepayment and transfer terms are in the loan documents |
| Next exchange | Available if the property was held for investment |
| Tax treatment of an LLC sale | Selling the whole LLC is treated as selling the property |
| Other exits | Refinance, 721 contribution, or hold for a basis reset at death |
You hold title, so there is no sponsor deciding the exit
In a DST the trustee holds title and the sponsor chooses when to sell, typically after a hold of five to ten years, and secondary sales of trust interests are thin and discounted. Our DST illiquidity page sets that out.
A direct title security removes the middle layer. You own the property through a single-member LLC, keep full decision-making authority, and decide when to sell, refinance for liquidity, or transition into a 721 exchange, with no co-owners and no exit constraints. A professional property manager handles leasing, maintenance and tenant service, but the decisions stay with you.
That is the trade the DST vs direct title guide describes: control and concentration on one side, simplicity and diversification on the other.
The lease and any loan travel with the house
Our direct title properties are triple-net leased, with monthly payments to you for the lease term. A sale during that term is normally a sale of a leased investment property, so your buyers are investors who want the lease, not owner-occupants who want the keys. Read the lease's assignment, renewal and termination clauses before you list.
If the purchase was financed, the loan documents control prepayment, assumption and any transfer restrictions. Those terms are set per offering and are not published on our pages, so get them before you close on the purchase, not before you sell.
The management agreement may also have a notice period. None of these documents stop you from selling; they decide what the buyer takes over and what it costs you to exit early.
Tax: the next exchange depends on why you held it
Section 1031(a)(1) covers real property "held for productive use in a trade or business or for investment," and requires the replacement to be held the same way. Nothing in the statute sets a minimum number of months, but a quick resale weakens the evidence of investment intent, as our answer on how long to hold before a 1031 explains.
Because the LLC is disregarded, its activities are treated "in the same manner as a sole proprietorship, branch, or division of the owner" under Reg. section 301.7701-2(a). Selling the house, or selling 100% of the LLC that owns it, is treated for income tax as your sale of the property.
To exchange again, engage a qualified intermediary before the sale closes; the 45-day and 180-day periods in section 1031(a)(3) run from that closing.
Hypothetical: selling in year four and exchanging up
Round numbers, hypothetical. You exchanged into a $400,000 direct title property with a $250,000 carryover basis and no loan. Four years later, with $30,000 of depreciation taken, your adjusted basis is $220,000 and an investor offers $460,000.
Sold outright, the gain is $240,000: the part reflecting depreciation, on this house and on the property it replaced, is unrecaptured section 1250 gain taxed at up to 25%, the rest at long-term capital gain rates, plus net investment income tax if your income is above the threshold. Exchanged, the full $460,000 goes to a qualified intermediary and into $460,000 or more of replacement property, and the gain carries forward.
In a DST you could not have chosen year four. Run your own numbers with your CPA before accepting the offer.
Your exit options, and what each one does to the deferred gain
Each route below is available to you as sole owner. The 721 UPREIT page explains why a contribution under section 721 ends the 1031 chain, and Commissioner v. Tufts is the authority that loan proceeds are not income.
- Sell and exchange: the gain stays deferred and you choose the next property.
- Sell and pay the tax: the simplest exit, and the most expensive for a long-held position.
- Refinance: cash without a sale, because loan proceeds are not income, but the new loan must be repaid or replaced at the next sale.
- Contribute to an operating partnership under section 721: no gain now, but no further 1031 at your level.
- Hold: under section 1014, heirs generally take a basis equal to fair market value at death.
Related questions
Do I need anyone's approval to list the property?
Not as a co-owner or sponsor, because there is none. Check the lease, any loan and the management agreement for notice or consent terms that apply to a transfer.
Can I sell to my tenant?
Yes, if the tenant wants to buy and the lease does not restrict it. The sale is treated the same way for tax as any other sale.
Can I move into the property instead of selling?
You can, but converting a replacement property to personal use soon after an exchange undermines the investment intent the exchange relied on. Our answer on moving into a 1031 replacement covers the rules.
Can I sell part of the property or the LLC?
Selling part of the LLC brings in a second member, which turns it into a partnership for tax. Selling the whole LLC or the whole property avoids that.
Is a direct title property easier to sell than a DST interest?
Generally yes, because you are selling a house with a lease to any investor, rather than a fractional security in a thin secondary market. Price still depends on the market and the lease when you sell.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.