Strategies / 1031 Exchange
1031 Exchange
Defer capital gains on the sale of investment real estate by reinvesting through institutional-quality Delaware Statutory Trust programs.
What is a 1031 Exchange?
Section 1031 of the Internal Revenue Code allows investors to defer the recognition of capital gains taxes on the sale of investment real estate by reinvesting the proceeds into a like-kind replacement property within a defined timeline.
A 1031 Exchange is one of the most established tax-deferral strategies for real estate investors. It enables continued capital growth while preserving the value that would otherwise be lost to taxes at the time of sale.
How a 1031 Exchange works
A 1031 Exchange follows a structured timeline. After the sale of investment real estate, the investor has 45 days to formally identify replacement property and 180 days to close on it. A fully tax-deferred 1031 Exchange generally requires the replacement property to equal or exceed the value of the relinquished property, with all of the equity from the sale reinvested. Debt does not need to be replaced dollar-for-dollar; it can be reduced if offset with additional equity. Cash taken out or equity not fully reinvested may create taxable boot.
IRC § 1031
A structured timeline
45 days to identify. 180 days to close. Tax deferral continues indefinitely.
01 / Property Sale
Day 0
Sale of original investment property. Proceeds are wired directly to a qualified intermediary.
02 / Identify Replacement
Day 45
Deadline to identify replacement property. Several identification rules are available, including the three-property, 200%, and 95% rules.
03 / Close Exchange
Day 180
Deadline to close on the replacement property and complete the exchange.
04 / Continue Deferral
Indefinite
Tax deferral continues until disposition of the replacement property absent a successive 1031 or 721 contribution.
The exchange must be facilitated by a qualified intermediary, who holds the sale proceeds and ensures the transaction meets IRC Section 1031 requirements. Tax deferral continues indefinitely until disposition of the replacement property absent a successive 1031 or 721 exchange, or may be eliminated entirely through a step-up in basis upon the investor's death.
Why Delaware Statutory Trusts
Before 2004, completing a 1031 exchange typically meant identifying, purchasing, and managing replacement property directly. Earlier fractional structures, including Tenant in Common arrangements, broadened access but introduced operational and lender-side complexity that limited scale.
In 2004, the IRS issued Revenue Ruling 2004-86, confirming that beneficial interests in a properly structured Delaware Statutory Trust are treated as direct interests in real property for purposes of Section 1031. The ruling established the legal foundation for the modern institutional DST market.
A DST is a real estate ownership structure that allows investors to hold a fractional interest in institutional-quality real estate. Because DST interests are recognized as eligible 1031 replacement property, investors can defer capital gains while accessing professionally managed real estate without the obligations of direct ownership.
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Sightbridge's Approach
1031 Exchange programs from Sightbridge
Sightbridge is preparing institutional-quality DST programs for the private wealth channel. Each program is designed to meet the standards of underwriting, structure, and service that institutional investors expect.
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Frequently asked
About Sightbridge Capital Partners
Common questions advisors and investors ask about Sightbridge, the firm's role in the private wealth channel, and how programs are structured.
Sightbridge Capital Partners is a private investment firm founded in 2025 and headquartered in Santa Monica, California. The firm designs and distributes institutional-quality tax-advantaged real estate programs through wirehouses, banks, independent broker-dealers, registered investment advisors, and family offices serving the U.S. private wealth channel.
Sightbridge serves as a structuring and distribution platform, partnering with institutional real estate firms that bring asset and operating expertise. Sightbridge may serve as co-sponsor on select DST and Opportunity Zone programs alongside its real estate partners, leading structuring, distribution, and ongoing investor service.
Sightbridge works directly with financial advisors at wirehouses, banks, independent broker-dealers, registered investment advisors, and family offices serving high-net-worth clients. On the program side, Sightbridge partners with institutional real estate firms, legal counsel, tax advisors, and technology providers to deliver programs to the wealth channel.
Sightbridge applies institutional standards to programs built for the private wealth channel. That shows up in asset quality, underwriting, program structure, transparency, alignment, and the operational experience advisors and investors receive over the life of each program.
Advisors evaluating a Sightbridge program can begin with a conversation with the Sightbridge team. From there, the firm provides the diligence materials, program documentation, and operational support needed to evaluate each program. Advisors can reach out through the Contact page or at info@sightbridge.com.
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