DST Accredited Investor Requirements: Do You Need to Be Accredited to Invest?

One of the first questions high-net-worth investors ask when they start researching Delaware Statutory Trusts is a simple but critical one: Do I need to be an accredited investor?

The answer is almost always yes — and understanding exactly why, and what the specific requirements are, will help you quickly determine whether a DST 1031 exchange is an available path for your situation.

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What Is an Accredited Investor? (The SEC Definition)

The U.S. Securities and Exchange Commission defines an accredited investor under Regulation D, Rule 501. To qualify, you must meet at least one of the following criteria:

Income-Based Qualification

• Individual income exceeding $200,000 in each of the two most recent calendar years, with a reasonable expectation of the same income in the current year
• Joint income (with a spouse or spousal equivalent) exceeding $300,000 in each of the two most recent years, with the same reasonable expectation going forward

Net Worth-Based Qualification

• A net worth exceeding $1,000,000, either individually or jointly with a spouse or spousal equivalent — excluding the value of your primary residence

Note that your primary home’s equity does not count toward this threshold. A mortgage balance that exceeds the home’s fair market value, however, does count as a liability against your net worth calculation.

Professional Credential Qualification (Added in 2020)

The SEC expanded the accredited investor definition in 2020 to include individuals who hold certain professional certifications, designations, or credentials recognized by the SEC. Currently, holders of the FINRA Series 7, Series 65, and Series 82 licenses qualify on this basis alone, regardless of income or net worth.

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Why Do Most DSTs Require Accredited Investor Status?

DST offerings are private securities. They are not publicly traded on an exchange like a REIT or a mutual fund. Instead, they are typically offered under Regulation D, Rule 506(b) or Rule 506(c) exemptions from SEC registration.

These exemptions come with strict requirements:

• 506(b) offerings allow up to 35 non-accredited investors per offering — but they must be “sophisticated” (financially capable of evaluating the investment on their own), and the sponsor cannot use general advertising or solicitation to market the deal.
• 506(c) offerings allow only accredited investors, but sponsors can advertise and market the offering more broadly.

In practice, the vast majority of DST sponsors structure their offerings under 506(b) or 506(c) with an all-accredited investor requirement. The reasons are straightforward:

1. Liability reduction: Non-accredited investors trigger additional disclosure requirements and legal exposure for sponsors.
2. Operational simplicity: Managing a pool of hundreds of investors — all of whom must meet suitability standards — is far easier when everyone meets the same accredited threshold.
3. Regulatory compliance at scale: Staying fully accredited keeps the deal cleaner when sponsors plan to raise $20M–$100M across multiple DST programs simultaneously.

The result: if you are searching for a 1031-exchange-eligible DST, you will almost certainly need to be an accredited investor.

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What Documentation Proves Accredited Investor Status?

DST sponsors and the broker-dealers who distribute their offerings will ask you to verify your accredited status. Common methods include:

• CPA or attorney letter confirming income or net worth thresholds have been met
• Tax returns (W-2s, K-1s, or 1040s) showing income for the past two years
• Bank and brokerage statements showing net worth exceeding $1 million (excluding primary residence)
• Third-party verification from a registered broker-dealer or investment advisor

You typically provide this documentation to your qualified intermediary, your DST sponsor, or the broker-dealer coordinating the transaction during the subscription process.

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What If You Don’t Meet the Accredited Investor Threshold?

If you currently fall below the accredited investor thresholds, your options for a tax-deferred exit from real estate ownership are more limited — but not zero.

1. Work Toward Qualification If your net worth is approaching the $1 million threshold (excluding your primary residence), a conversation with your CPA or financial advisor may reveal that you’re closer to qualifying than you think. Investment accounts, business equity, real estate equity (other than your primary home), and other assets all count.

2. Consider a 721 UPREIT Exchange Some retiring investors use a 721 exchange to contribute their property to a real estate investment trust (REIT) operating partnership in exchange for operating partnership units. This can defer capital gains while converting an illiquid asset into a more liquid position. Accreditation requirements vary by structure, and some pathways are more accessible to non-accredited investors.

3. Installment Sale (Seller Financing) If deferral rather than elimination is the goal, an installment sale can spread capital gains recognition over multiple years, reducing the tax hit in any single year. This is a taxable strategy — not a deferral — but it may be appropriate depending on your situation.

4. Qualified Opportunity Zone Funds Investment in a Qualified Opportunity Zone (QOZ) fund can defer and partially reduce capital gains, though these investments carry their own risks, illiquidity periods, and eligibility rules. Some QOZ funds accept non-accredited investors, though many do not.

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The Bottom Line

For the vast majority of retiring real estate investors pursuing a 1031 exchange into a DST, accredited investor status is a practical requirement. The $1 million net worth threshold (excluding primary residence) or the $200,000/$300,000 income thresholds are the most common paths to qualification.

The good news: most investors actively researching DST 1031 exchanges already meet these thresholds. If you’re selling a long-held appreciated property, the equity alone may place you well above the net worth bar.

If you’re not yet certain whether you qualify, your CPA is the right first call. If you do qualify, connecting with a qualified DST specialist is the logical next step — one who can walk you through current offerings, suitability requirements, and how a DST fits within your broader retirement income plan.

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The information in this article is educational and does not constitute investment, tax, or legal advice. DST investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Consult a licensed financial advisor and tax professional before making any investment decisions.