DST vs. TIC
DST vs. TIC compares two fractional real estate structures for 1031 exchanges; DSTs allow many passive investors while TICs cap owners at 35 with more control.
Definition
DST vs. TIC is a comparison of the two main fractional-ownership structures used as 1031 replacement property. Both let multiple investors co-own institutional real estate, but they differ in structure and flexibility.
A Tenancy in Common (TIC), sanctioned by IRS Revenue Procedure 2002-22, gives each investor direct deeded title, limits the deal to 35 co-owners, and generally requires unanimous consent for major decisions, plus each investor typically signs on the loan. A DST, governed by Revenue Ruling 2004-86, holds title at the trust level, allows far more investors with lower minimums, requires no investor loan qualification, and is entirely passive.
DSTs have become far more popular because of lower minimums, non-recourse financing already in place, and no need for co-owner consensus. TICs offer more control and a voice in decisions, which some investors prefer despite the added complexity. Both qualify as like-kind property when properly structured.
Key points
- TIC caps ownership at 35 investors; DST allows many more
- TIC gives deeded title and voting rights; DST is fully passive
- TIC investors usually sign the loan; DST debt is non-recourse and pre-arranged
- TIC follows Rev. Proc. 2002-22; DST follows Rev. Rul. 2004-86
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.