Structured Sale vs. DST: Which Keeps More in Your Pocket?

When you sell land, the real question isn’t just “What’s my price?”, it’s “How much do I actually keep after taxes?”

Two common tools people hear about are Structured Installment Sales and Delaware Statutory Trusts (DSTs). At first glance they sound similar, they both promise some kind of tax benefit. But here’s the truth: Structured Sales don’t erase the tax bill. DSTs can actually defer it, sometimes forever.

What is a structured installment sale?

A Structured Sale is basically a deal where you agree to get paid over time instead of all at once. You might sell your land for $2 million, but instead of a big check, you take $200,000 a year for 10 years.

• Each year, part of that $200K is taxable gain.
• You still end up paying the same total tax, just spread out.
• Equipment or livestock depreciation? The IRS makes you pay those taxes upfront, no matter what.
• If you die before the note is paid off, your heirs do not get a step-up in basis. They inherit the tax bill and must keep paying tax on each installment as it’s collected.
• You’re relying on the buyer, or an insurance company backing the note, to keep paying as promised.

In short: With a Structured Sale, you didn’t dodge the IRS. You just told them, “Take smaller bites as I collect checks.” The bill is still coming due.

What is a DST/1031 exchange?

A Delaware Statutory Trust used in a 1031 exchange works completely differently. Instead of spreading out the tax, you defer it entirely by rolling your sale proceeds into professionally managed real estate.

• You sell your land, park the money with a Qualified Intermediary, and buy into a DST.
• All of your gain, capital gains and real-estate depreciation recapture, is deferred.
• You keep every dollar working instead of losing a chunk to the IRS.
• You’re set up for the potential for monthly income from institutional properties (apartments, storage, industrial, etc.) without having to manage them, not guaranteed.
• Hold the DST until death, and your heirs usually get a step-up in basis. That can wipe out the deferred taxes altogether.

In short: With a DST, you told the IRS, “I’ll pay you later… maybe never.”

The big difference

• Structured Sale: Taxes are guaranteed. You’ll still pay every penny, just on a payment schedule, and your kids will too if you pass away early.
• DST: Taxes are deferred. If structured properly and held until death, your family may never have to pay them at all.

Here is the same difference laid out side by side.

	Structured Installment Sale	DST / 1031 Exchange
What you hold	A note paying you over time	An interest in professionally managed real estate
How the tax is handled	Same total tax, paid as each installment is collected	Deferred through the 1031 exchange
Income structure	Payments spread over the installment period, each partly taxable gain	Potential monthly income from institutional properties, not guaranteed
Equipment and livestock depreciation	Those taxes are paid upfront	Real-estate depreciation recapture is deferred with the gain
At death	No step-up in basis, heirs keep paying tax on each installment	Heirs usually receive a step-up in basis
Who you’re relying on	The buyer, or an insurance company backing the note	Performance of the underlying properties

Should you choose a structured sale or a DST?

If you’re done with investing and just want cash, and you don’t care about your wealth working for you anymore, a Structured Sale can work. But don’t be fooled, you’re still going to write checks to Uncle Sam every year, and if you die early, your kids inherit that tax bill.

If your goal is to keep every dollar working, reduce your tax bite, and pass wealth to your kids without saddling them with a tax bill, a DST/1031 is usually the stronger path. Once you pass, your tax bill will be wiped out, so your kids can receive a step-up in basis, preserving your name, your wealth, and your legacy.