Cash out
- Tax at closing
- $670,694
- Working capital
- $2,122,306
- Year-1 income (after tax)
- $25,875
- Year 20 if sold
- $7,601,245
- Deferred tax
- $0
Recognize the whole gain at closing. After-tax cash compounds in a brokerage account.
The deal
$2,713,000 gain · cash-out tax $670,694 (24.7%)
The split
How much 1031s
70/30
All marketAll DST
Into DST
$1,915,998
after load, tax deferred
Into market
$630,759
after $207,141 tax on boot
After 20 years
Pay tax, invest the rest
finishes at $7,601,245 after tax. That’s +$303k versus 70/30 split.
Cash out
$7.60M
If sold in year 20
70/30 split
$7.30M
If sold in year 20
100% DST
$7.19M
If sold in year 20
Spend the income
Off = reinvest DST checks and dividends
Horizon20 years
70/30 split
- Tax at closing
- $207,141
- Working capital
- $2,546,757
- Year-1 income (after tax)
- $91,502
- Year 20 if sold
- $7,298,678
- Deferred tax still hanging
- $574,897
Boot of $837,900 is taxable. The rest rolls into DST units.
100% DST
- Tax at closing
- $0
- Working capital
- $2,737,140
- Year-1 income (after tax)
- $119,731
- Year 20 if sold
- $7,190,888
- Deferred tax still hanging
- $829,758
Full deferral. Illiquid, typically 5–10 year terms, then 1031 again, 721, or cash out.
Path
After-tax nest egg
If you liquidate in that year and pay leftover 1031 tax.
Cash outYour split100% DST
Milestones
5 · 10 · 15 · 20 years
After-tax wealth if you sold that year.
| Year | Cash out | Split 70% | 100% DST | Leader |
|---|---|---|---|---|
| 5 | $2,859,228 | $2,865,025 −$491,578 tax | $2,870,453 −$710,730 tax | DST |
| 7 | $3,236,806 | $3,231,801 −$498,307 tax | $3,234,107 −$720,343 tax | Cash out |
| 10 | $3,915,661 | $3,899,801 −$516,187 tax | $3,900,166 −$745,886 tax | Cash out |
| 15 | $5,430,135 | $5,316,888 −$542,048 tax | $5,281,564 −$782,830 tax | Cash out |
| 20 | $7,601,245 | $7,298,678 −$574,897 tax | $7,190,888 −$829,758 tax | Cash out |
Read the ranking
What the numbers mean
Paying the tax and investing wins
After 20 years, cashing out and putting $2.12M to work at 8.0% outruns a DST growing at 6.5% all-in. The market path is ahead of 100% DST by $410k after tax. That is the cost of locking money into a 4–6% income product.
Best modeled split is 0% DST
Sweeping 0–100% in 5-point steps, 0% DST / 100% market produces the highest after-tax total at year 20 ($7.60M). Drag the split slider there to lock it in.
This model assumes you pay the deferred tax
The DST still carries $830k of tax if you liquidate in year 20. A step-up in basis at death can wipe that out. If you expect to hold until death, turn on step-up — it frequently flips 100% DST into first place.
DST pulls even in year 4
That’s when after-tax DST value (plus income, if you’re spending it) first matches the cash-out-and-invest path. Before that, liquidity and market compounding lead; after that, the extra undeferred principal does.
DST replaces more spendable cash in year one
Year-one after-tax income is $119,731 on 100% DST vs. $25,875 on a cash-out portfolio that only throws off dividends. If you are replacing rental cash flow, income — not terminal wealth — may be the constraint.
Structure first: LLC interests are not like-kind
Selling a partnership / LLC membership interest generally cannot be 1031’d. Owners of a long-held park or other entity usually drop-and-swap to tenancy-in-common (or have the entity exchange) before closing. This calculator models the economics assuming a valid exchange — not the paperwork.