A Deferred Sales Trust (DST) is a proven legal strategy that allows you to sell real estate, a business, or appreciated securities — and legally defer capital gains taxes at the time of sale. Instead of writing a large check to the IRS the year you sell, you can structure an ongoing income stream and grow the value of your proceeds over time.
Schedule Your Free Strategy CallA Deferred Sales Trust is a legal tax planning tool that uses a structured installment sale under IRC §453 to defer capital gains taxes when you sell a highly appreciated asset. Rather than receiving the full proceeds of a sale directly — and owing taxes on the entire gain in that calendar year — the asset is sold through the Trust, and the proceeds are reinvested and paid to you over time as income.
This is not a tax loophole. The Deferred Sales Trust is a long-standing, IRS-recognized legal structure that has been used successfully by property owners, business sellers, and individuals holding appreciated securities who want to maximize what they keep from a sale.
A Deferred Sales Trust may be a powerful option if you are planning to sell, or have recently sold, any of the following types of highly appreciated assets:
Investment properties, commercial real estate, rental portfolios, land, and vacation properties with significant appreciation.
Business owners considering a sale or exit who want to maximize their after-tax proceeds.
Stocks, mutual funds, or other securities with a low-cost basis and substantial unrealized gain.
A general rule of thumb: the DST tends to be most impactful when the gain on a sale exceeds $250,000 and the seller is looking for an alternative to paying a large lump-sum tax bill in a single year.
Here is how the process works from start to finish:
Avoid the immediate tax hit that typically accompanies the sale of a highly appreciated asset. You pay taxes only on income as you receive it, spreading the liability over years rather than a single tax year.
Because taxes are deferred, the full pre-tax proceeds remain invested inside the Trust, giving you a larger base from which to generate income.
You have flexibility in how income is structured from the Trust — including the ability to adjust over time. The Trust can also accommodate partial or full withdrawals under the terms of the promissory note.
Proceeds invested inside the Trust grow on a tax-deferred basis, similar in concept to a retirement account, though the Trust is structured differently and for a specific purpose.
Unlike certain charitable strategies, the remaining assets in a Deferred Sales Trust pass directly to your designated heirs — not to a charity. Your estate retains the value of the Trust remainder.
The Deferred Sales Trust is built on IRC §453, a well-established section of the tax code governing installment sales. It is not an experimental strategy — it has been used and refined for decades by tax and estate planning professionals.
No. A 1031 Exchange requires you to reinvest in a ‘like-kind’ property and follow strict timelines. A DST has no replacement property requirement, no time restriction, and can be used with businesses and securities in addition to real estate. It also allows you to receive income from the sale proceeds rather than rolling them into a new asset.
Yes, it is legal. The Deferred Sales Trust is built on IRC §453, a long-standing section of the U.S. tax code. Properly structured and administered, it is a recognized installment sale arrangement. Proper setup by a qualified estate and tax planning attorney is essential to ensure the structure holds.
The Trust is administered by a professional trustee. While direct control is transferred to the Trust (which is part of what creates the tax benefit), the investment plan must be approved by you, and you retain rights to the income stream and — in many cases — the ability to take withdrawals under the terms of the promissory note.
To your heirs. A Deferred Sales Trust is not a charitable trust. The Trust remainder passes to your designated beneficiaries upon your death. This is one of the key distinctions between a DST and a Charitable Remainder Trust (CRT), which is a separate strategy.
The Trust must be established before the sale closes. It cannot be created retroactively after the sale has already occurred. If you are actively in negotiations to sell a property or business, it is important to engage an estate and tax planning professional early in the process to evaluate whether a DST is the right fit.
Every Deferred Sales Trust transaction we work on is supported by a team of specialists who have dedicated their careers to this specific strategy. When you work with Davenport & Associates on a DST, you have a full team in your corner — from the legal structure to the trustee administration.
Kent LeFevre serves as the National DST Trustee for transactions coordinated through Davenport & Associates. With 30+ years of real estate and trust administration experience, Kent brings a depth of practical knowledge that goes beyond theory — he is a DST client himself, having used the strategy to sell 31 of his own buildings.
Kent manages and implements each DST transaction from start to finish, ensuring the Trust is properly established, correctly administered, and that the seller’s income stream is set up as intended. His hands-on experience on both sides of the table — as a seller and as a trustee — makes him uniquely qualified to guide clients through the process.
Todd Jackson is the DST Tax Attorney who provides the legal backbone of every transaction. Todd reviews each client’s sales contract, analyzes the specific tax implications of their situation, and structures the DST to optimize capital gains tax deferral for that deal.
As part of the Davenport & Associates DST process, every client receives a complimentary consultation with Todd before moving forward. This gives you direct access to a specialist who can review the details of your specific sale and confirm the structure is right for your circumstances — at no cost to you.
Schedule a complimentary strategy call with our team. We’ll review your situation, walk you through whether a Deferred Sales Trust is a fit, and give you a clear picture of what your options look like — with no obligation.
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