Imagine selling a property and walking away without paying capital gains taxes—then using the full proceeds to buy an even bigger, higher-income property. Sounds like a fantasy? Not for savvy investors using 1031 exchanges.

Most investors leave hundreds of thousands of dollars on the table because they don’t understand how to leverage this powerful IRS strategy. For high-net-worth and sophisticated investors, 1031 exchanges are a cornerstone for portfolio growth, tax deferral, and scaling wealth efficiently. Here’s everything you need to know.

DSTs qualify for 1031 exchanges thanks to Revenue Ruling 2004-86, which “created the structure and restrictions that allowed the trusts to become eligible for tax-deferral benefits” (Tax Notes, 2025). This ruling set the framework that allows investors to defer capital gains taxes—but it comes with strict boundaries: