---
title: "Client Case Study: The DST Parachute Saves an Exchange"
description: Using the DST as a backup option in a 1031 Exchange.
image: https://www2.1031dst.com/hubfs/Parachute.png
---
[(844-437-8103)](tel:8444378103)
-
-
- [Sign In](https://www.1031dst.com/sign-in/)
- [Browse Properties](https://www.1031dst.com/property-listings-directory/)
[](https://www.1031dst.com/)
- [Our Process](https://www.1031dst.com/our-process/)
- [About Us](https://www.1031dst.com/about/)
- [Sponsors](https://www.1031dst.com/sponsor/)
- Exchanges
- [1031 Exchange](https://www2.1031dst.com/a-guide-to-your-1031-exchange)
- [1033 Exchange](https://www2.1031dst.com/1033-exchange)
- [Delaware Statutory Trusts](https://www2.1031dst.com/abcs-of-dsts)
- [Opportunity Zones](https://www2.1031dst.com/opportunity-zones)
- [Glossary](https://www.1031dst.com/glossary/)
- [Properties](https://www.1031dst.com/property-listings-directory/)
- [Resources](https://www2.1031dst.com/resources)
- [Insights](https://www2.1031dst.com/insights)
- [Events](https://www.1031dst.com/events/)
- [Contact Us](https://www.1031dst.com/contacts/)
- [Our Process](https://www.1031dst.com/our-process/)
- [About Us](https://www.1031dst.com/about/)
- [Sponsors](https://www.1031dst.com/sponsor/)
- Exchanges
- [1031 Exchange](https://www2.1031dst.com/a-guide-to-your-1031-exchange)
- [1033 Exchange](https://www2.1031dst.com/1033-exchange)
- [Delaware Statutory Trusts](https://www2.1031dst.com/abcs-of-dsts)
- [Opportunity Zones](https://www2.1031dst.com/opportunity-zones)
- [Glossary](https://www.1031dst.com/glossary/)
- [Properties](https://www.1031dst.com/property-listings-directory/)
- [Resources](https://www2.1031dst.com/resources)
- [Insights](https://www2.1031dst.com/insights)
- [Events](https://www.1031dst.com/events/)
- [Contact Us](https://www.1031dst.com/contacts/)
- [Browse Properties](https://www.1031dst.com/property-listings-directory/)
- [Sign In](https://www.1031dst.com/sign-in/)
# Fortitude's Insights
[DST](https://www2.1031dst.com/insights/topic/dst) [1031 Exchange](https://www2.1031dst.com/insights/topic/1031-exchange)
# [Client Case Study: The DST Parachute Saves an Exchange](https://www2.1031dst.com/insights/the-dst-parachute-saves-an-exchange)
By [Justin Kiehne](https://www2.1031dst.com/insights/author/justin-kiehne) | 20, August 2020
[READ NOW](https://www2.1031dst.com/insights/the-dst-parachute-saves-an-exchange)
[](https://www2.1031dst.com/insights/author/justin-kiehne)
[Justin Kiehne](https://www2.1031dst.com/insights/author/justin-kiehne)
Tags: [DST](https://www2.1031dst.com/insights/topic/dst) [1031 Exchange](https://www2.1031dst.com/insights/topic/1031-exchange)
For many real estate operators, investors, and owners, their real estate is much more than just property. Whether they own a single commercial building, a portfolio of commercial properties, or a collection of residential rentals, that real estate has meaning beyond NOI (Net Operating Income), occupancy, and FMV (Fair Market Value). Those properties are the culmination of a life’s hard work, the entirety of their worldly wealth, or their nest egg to help see them through their golden years.
For these reasons, a botched [1031 Exchange](https://www2.1031dst.com/a-guide-to-your-1031-exchange) can be devastating. Clients with highly appreciated and/or highly depreciated properties may be at the risk of debilitating tax bills. Between a possible capital gains tax at 20%, potential depreciation recapture tax at 25%, and an additional Net Investment Income tax at 3.8% (sometimes called the ObamaCare tax), a failed exchange and an unexpected tax bill can take a sizable chunk out of that nest egg, erasing years of hard work and wealth accumulation.
#### The Exchange
A client of [Fortitude Investment Group](http://www.1031dst.com)recently had himself a very good day. He received a large offer on his commercial property. This property made up the majority of his worldly wealth and represented years of hard work. As an owner/operator nearing retirement age, he used this as an opportunity to Identify a replacement property in his desired retirement city. He sold his house and he and his wife moved to his new city, even before closing on his replacement property and completing his exchange.
#### The Fallback Plan
During the strict **45-day identification period**, we helped the client determine which Delaware Statutory Trust’s (DST’s) most closely met his investment criteria. We also helped determine which DST’s might remain available long enough to be used as the replacement property if his preferred property did not make it to closing (as a “back-up”). This can happen for any number of reasons – financing problems, due diligence findings, tenants’ Right of Refusal, etc. We were able to use the 200% rule to identify both the DST’s and his preferred whole property.
#### The Result
Unfortunately, factors uncovered during the due diligence process, but after the close of his 45-day ID period, made the purchase and operation of the client’s first choice property untenable. However, because he had also identified DST’s as a fallback option, he was able to successfully complete his exchange and defer a potentially large tax bill. By closing on his identified DST’s, he was afforded the potential for passive income and appreciation through fractional ownership of institutional real estate assets. These investments were also diversified geographically and by real estate sector.
The use of the DST, along with assistance from the Fortitude team, resulted in a completed exchange and help circumvent what could have been a hefty tax bill. The client’s relinquished property was both fully depreciated and highly appreciated, meaning that he would have owed upwards of 20% of the FMV of the property to Uncle Sam. With most of his net worth tied into this property, a payment of that sort would have significantly impacted his retirement income and his subsequent quality of life.
If you or your clients need assistance sourcing replacement properties in your 1031 Exchange, need help getting your exchange across the finish line, or want to identify a back-up option please contact our team or download our helpful [1031 Exchange Guidebook](https://www2.1031dst.com/1031-exchange-guide)!
For more information, please feel free to [contact our team](https://www.1031dst.com/contacts/).
Examples are for illustration purpose only – individual circumstances may vary. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney.
# [Justin Kiehne](https://www2.1031dst.com/insights/author/justin-kiehne)
Justin R. Kiehne is a Financial Advisor with Fortitude Investment Group, located in Juno Beach, Florida, where Mr. Kiehne resides. Justin’s professional career began in the Aerospace Engineering industry, working in gas turbine engine design and analysis, managing technical teams and customer relationships. With his nontraditional background, Justin brings a unique, analytical perspective and a passion for customer service to bear in which he seeks to meet and exceed customer expectations. At Fortitude, Justin focuses on real estate and tax advantaged investments, retirement, and estate planning. He prides himself on delivering high quality, institutional grade real estate solutions, alternative investment options, and comprehensive, individually tailored portfolios to the retail investor that seeks to diversify investments, help remove market volatility, and maximize income potential. Mr. Kiehne was raised in Annapolis, Maryland and is an avid Navy Football fan. He holds a Master of Science Degree in Mechanical Engineering from the University of Florida and a Bachelor of Science degree with a Dual Major in Physics and Biology from Dickinson College. A former award-winning lacrosse and track athlete, Justin maintains an interest in weightlifting, golf, lacrosse, and fishing. Justin maintains his series 7 General Securities License.
This is for informational purposes only and is not an offer to buy/sell an investment. There are risks associated with investing in Delaware Statutory Trust (DST) and real estate investment properties including, but not limited to, loss of entire principal, declining market value, tenant vacancies and illiquidity. Diversification does not guarantee profits or guarantee protection against losses. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investors situations and objectives vary this information is not intended to indicate suitability for any particular investor. This information is not meant to be interpreted as tax or legal advice. Please speak with your legal and tax advisors for guidance regarding your particular situation.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA) Fortitude Investment Group is independent of CIS, CAM, and CIA.
### Subscribe To Our Blog
Thanks for submission!!
- Recent
- Popular
### Posts by Topic
- [1031 Exchange (117)](https://www2.1031dst.com/insights/tag/1031-exchange)
- [DST (54)](https://www2.1031dst.com/insights/tag/dst)
- [Delaware Statutory Trust (20)](https://www2.1031dst.com/insights/tag/delaware-statutory-trust)
- [Opportunity Zones (16)](https://www2.1031dst.com/insights/tag/opportunity-zones)
- [1031 (14)](https://www2.1031dst.com/insights/tag/1031)
- [Taxes (13)](https://www2.1031dst.com/insights/tag/taxes)
- [1033 Exchange (8)](https://www2.1031dst.com/insights/tag/1033-exchange)
- [Covid-19 (8)](https://www2.1031dst.com/insights/tag/covid-19)
- [Estate Planning (7)](https://www2.1031dst.com/insights/tag/estate-planning)
- [Real Estate Investing (7)](https://www2.1031dst.com/insights/tag/real-estate-investing)
- [1031 Exchange Deadlines (6)](https://www2.1031dst.com/insights/tag/1031-exchange-deadlines)
- [Landlords (6)](https://www2.1031dst.com/insights/tag/landlords)
- [Real Estate (6)](https://www2.1031dst.com/insights/tag/real-estate)
- [1031 Delaware Statutory Trust (5)](https://www2.1031dst.com/insights/tag/1031-delaware-statutory-trust)
- [1031 replacement property (5)](https://www2.1031dst.com/insights/tag/1031-replacement-property)
- [721 Exchange (5)](https://www2.1031dst.com/insights/tag/721-exchange)
- [Capital Gains (5)](https://www2.1031dst.com/insights/tag/capital-gains)
- [Private Real Estate (5)](https://www2.1031dst.com/insights/tag/private-real-estate)
- [Tax Relief (5)](https://www2.1031dst.com/insights/tag/tax-relief)
- [NYC Real Estate (4)](https://www2.1031dst.com/insights/tag/nyc-real-estate)
- [Private Placements (4)](https://www2.1031dst.com/insights/tag/private-placements)
- [2020 Election (3)](https://www2.1031dst.com/insights/tag/2020-election)
- [Biden (3)](https://www2.1031dst.com/insights/tag/biden)
- [Fortitude (3)](https://www2.1031dst.com/insights/tag/fortitude)
- [Inflation (3)](https://www2.1031dst.com/insights/tag/inflation)
- [Interest Rates (3)](https://www2.1031dst.com/insights/tag/interest-rates)
- [Investments (3)](https://www2.1031dst.com/insights/tag/investments)
- [PIG/PAL (3)](https://www2.1031dst.com/insights/tag/pig-pal)
- [Case Study (2)](https://www2.1031dst.com/insights/tag/case-study)
- [Depreciation Recapture (2)](https://www2.1031dst.com/insights/tag/depreciation-recapture)
- [Disaster Relief (2)](https://www2.1031dst.com/insights/tag/disaster-relief)
- [Multiple Owner Real Estate (2)](https://www2.1031dst.com/insights/tag/multiple-owner-real-estate)
- [Qualified Intermediary (2)](https://www2.1031dst.com/insights/tag/qualified-intermediary)
- [REIT (2)](https://www2.1031dst.com/insights/tag/reit)
- [Renter Protection Laws (2)](https://www2.1031dst.com/insights/tag/renter-protection-laws)
- [Retirement (2)](https://www2.1031dst.com/insights/tag/retirement)
- [1031 Delaware Statutory Trust Knowledge (1)](https://www2.1031dst.com/insights/tag/1031-delaware-statutory-trust-knowledge)
- [1033 (1)](https://www2.1031dst.com/insights/tag/1033)
- [Alternative Investments (1)](https://www2.1031dst.com/insights/tag/alternative-investments)
- [Boot (1)](https://www2.1031dst.com/insights/tag/boot)
- [Commercial Real Estate Transactions (1)](https://www2.1031dst.com/insights/tag/commercial-real-estate-transactions)
- [DST Sponsor (1)](https://www2.1031dst.com/insights/tag/dst-sponsor)
- [Diversification (1)](https://www2.1031dst.com/insights/tag/diversification)
- [FIRPTA (1)](https://www2.1031dst.com/insights/tag/firpta)
- [IRC 2704 (1)](https://www2.1031dst.com/insights/tag/irc-2704)
- [IRS (1)](https://www2.1031dst.com/insights/tag/irs)
- [Insurance (1)](https://www2.1031dst.com/insights/tag/insurance)
- [Long-Term Care (1)](https://www2.1031dst.com/insights/tag/long-term-care)
- [Multifamily Real Estate (1)](https://www2.1031dst.com/insights/tag/multifamily-real-estate)
- [Net Lease Investments (1)](https://www2.1031dst.com/insights/tag/net-lease-investments)
- [Passive Income (1)](https://www2.1031dst.com/insights/tag/passive-income)
- [Property Regulations (1)](https://www2.1031dst.com/insights/tag/property-regulations)
- [Reverse 1031 Exchange (1)](https://www2.1031dst.com/insights/tag/reverse-1031-exchange)
- [Step-Up in Basis (1)](https://www2.1031dst.com/insights/tag/step-up-in-basis)
- [Tenant-In-Common (1)](https://www2.1031dst.com/insights/tag/tenant-in-common)
- [Triple Net Lease (1)](https://www2.1031dst.com/insights/tag/triple-net-lease)
[](https://cta-redirect.hubspot.com/cta/redirect/4583849/2e9f6bdd-d0be-40a4-abf5-0ce73c867952)
#### Let Us Know What You Thought about this Post.
Put your Comment Below.
[Previous Post](https://www2.1031dst.com/insights/1031-exchangers-find-closing-relief-with-dsts)
##### [Speed Matters: 1031 Exchangers Find Closing Relief with DSTs](https://www2.1031dst.com/insights/1031-exchangers-find-closing-relief-with-dsts)
[Next Post](https://www2.1031dst.com/insights/1031-exchange-rule-at-risk-once-again-as-election-looms)
##### [1031 Exchange Rule at Risk Once Again as Election Looms](https://www2.1031dst.com/insights/1031-exchange-rule-at-risk-once-again-as-election-looms)
### New York
- [(844-437-8103)](tel:8444378103)
- [1031@fortitudeinvestments.com](mailto:1031@fortitudeinvestments.com)
- [61 Route 25A Setauket, NY 11733](https://goo.gl/maps/bdbvzDBiRZxGNmDa7)
### New Jersey
- [(844-437-8103)](tel:8444378103)
- [1031@fortitudeinvestments.com](mailto:1031@fortitudeinvestments.com)
- [101 Cedar Lane, Suite 101 Teaneck, NJ 07667](http://go.techbear.com/55072)
### Florida
- [(844-437-8103)](tel:8444378103)
- [1031@fortitudeinvestments.com](mailto:1031@fortitudeinvestments.com)
- [3801 PGA Blvd. Suite 600, Palm Beach Gardens, FL 33410](https://goo.gl/maps/e58XUSTQEX29dTyHA)
### California
- [(844-437-8103)](tel:8444378103)
- [1031@fortitudeinvestments.com](mailto:1031@fortitudeinvestments.com)
- [2950 Buskirk Avenue, Suite 300 Walnut Creek, CA 94597](http://go.techbear.com/ccb7e)
[](https://brokercheck.finra.org/)
This is for informational purposes only and is not an offer to buy/sell an investment. Pictures used are for illustration purposes only and are not current offerings. Future offerings will vary and may change at any time. The companies depicted in the photographs and listed herein may have proprietary interests in their names and trademarks. Nothing herein shall be considered an endorsement, recommendation, or offer to purchase by Fortitude Investment Group, CIS, CAM and CIA, or the investment vehicles they may offer of such depicted companies. Further, none of the companies are affiliated with Fortitude Investment Group, CIS, CAM and CIA in any manner. [Concorde Investment Services, LLC 19500 Victor Parkway, Suite 550, Livonia, MI 48152.](https://goo.gl/Wvki2W)
Securities offered through Concorde Investment Services, LLC (CIS), member [FINRA](http://www.finra.org/)/[SIPC](https://www.sipc.org/). Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA) Fortitude Investment Group is independent of CIS, CAM, and CIA, all of whom are unaffiliated with third-party sites, cannot verify the accuracy of, nor assume responsibility for any content of linked third-party sites. Information available on third-party sites is for informational purposes only.
[Concorde's FORM CRS.](https://concordeis.com/formcrs.pdf)
DST Investments | 1031 Exchange Options – Fortitude Investment Group © 2026. [Privacy Policy](https://www.1031dst.com/investments/privacy-policy/)
```json
{
"@context" : "https://schema.org",
"@type" : "BlogPosting",
"author" : {
"@type" : "Person",
"name" : "Justin Kiehne",
"url" : "https://www2.1031dst.com/insights/author/justin-kiehne"
},
"dateModified" : "2020-08-20T14:45:00.405Z",
"datePublished" : "2020-08-20T14:45:00.000Z",
"headline" : "Client Case Study: The DST Parachute Saves an Exchange",
"image" : [ "https://www2.1031dst.com/hubfs/Parachute.png" ],
"mainEntityOfPage" : {
"@id" : "https://www2.1031dst.com/insights/the-dst-parachute-saves-an-exchange",
"@type" : "WebPage"
},
"publisher" : {
"@type" : "Organization",
"logo" : {
"@type" : "ImageObject",
"url" : "https://www2.1031dst.com/hubfs/Fortitude%20Investment%20Group%20Logo.jpg"
},
"name" : "Fortitude Investment Group llc."
}
}
```