Tools · For property sellers

1031 vs DST vs Opportunity Zone calculator

Updated October 14, 2026 · Free, no sign-up, runs in your browser

Three ways to defer tax on a gain, compared on the same numbers. A DST is a 1031 replacement property, so its tax result matches the 1031 row; the differences are what qualifies, how much you reinvest and what happens at exit. The math is the same as our OZ calculator.

Your gain

Capital gainStateYears heldAnnual returnFund type Rural QROF (30% step-up)30% step-up instead of 10%.

After-tax value, year 10

Path	After-tax value, year 10
Pay the tax now, invest the rest Tax on the gain today; after-tax amount grows; tax on appreciation at sale.	$661,785
1031 exchange (sold in year 10) Full deferral; deferred gain and appreciation taxed when you sell in year 10.	$749,485
DST interest through a 1031 (sold in year 10) Same tax result as the 1031 row: a Delaware statutory trust interest can be like-kind replacement property (Rev. Rul. 2004-86). Sponsor fees and loads, which lower the return, are not modeled.	$749,485
OZ 2.0 investment (standard QOF, 10% step-up) · highest Deferred gain taxed in year 5 after the step-up; QOF appreciation excluded after 10 years.	$833,362

Assumptions (read before relying on this)

Models the gain only for every path, so the paths are comparable. A real 1031 requires reinvesting the full sale proceeds into like-kind real property; a QOF needs only the gain.
Tax on the gain today: 23.8% (20% federal long-term + 3.8% NIIT + 0.00% simplified state rate; state conformity to OZ rules varies).
OZ 2.0: rolling 5-year deferral with a 10% basis step-up (30% for a qualified rural fund), per IRS Notice 2026-55; appreciation excluded after a 10-year hold. A sale before 10 years is taxed on all the QOF's appreciation (basis is the deferred gain once it's included), and a sale before year 5 is itself the inclusion event, with no step-up (IRC §1400Z-2(b)–(c)). Same rule as our OZ calculator and recapture calculator.
1031: the property is sold in year 10, recognizing the deferred gain and the appreciation. It ignores further exchanges, a step-up at death, depreciation and recapture, leverage, fees, and the time value of the year-5 OZ tax payment.
Same pre-tax annual return on every path. Illustrative only; not tax advice.

The rules side by side

	1031 exchange	DST (via 1031)	Opportunity Zone fund
What gain qualifies	Gain on real property held for business or investment	Same (the DST is the replacement property)	Any capital gain: stock, crypto, real estate, a business
What you reinvest	The full net sale price, or the rest is taxable boot	Same	Only the gain
Deadline	Identify in 45 days, close in 180 days (§1031(a)(3))	Same	Invest within 180 days of the gain (§1400Z-2(a))
How long tax is deferred	Until you sell outside an exchange	Same	Investments after Dec 31, 2026: 5 years from each investment (P.L. 119-21, §70421)
Basis step-up	None	None	10% after 5 years; 30% for a qualified rural fund (OZ 2.0)
Tax on appreciation	Deferred, then taxed on sale	Same	Excluded if held 10+ years (§1400Z-2(c))
Management	You own and run the property	Passive; the sponsor runs the trust	Passive fund, or your own QOF
Primary source	IRC §1031	Rev. Rul. 2004-86	IRC §1400Z-2, P.L. 119-21

Can I combine a 1031 and an Opportunity Zone?

Yes, for the boot. Under §1031(b), cash or other property you don't reinvest is recognized gain. Recognized capital gain can go into a QOF within 180 days, counted from the day the gain would be recognized (Treas. Reg. §1.1400Z2(a)-1). The gain the exchange defers isn't recognized, so it can't be deferred twice.

Your exchange

Property type Sold real property held for business or investmentNet sale price (after selling costs)Adjusted basisReinvested in replacement propertyDate the gain is recognized

Result

Boot: recognized gain you can invest in a QOF

$300,000

Last day to invest it in a QOF (day 180): Fri, April 30, 2027

Yes, you can combine them: put up to $300,000 of recognized boot gain into a QOF by Fri, April 30, 2027. Invest by Dec 31, 2026 for OZ 1.0, or Jan 1, 2027 or later for OZ 2.0 (5-year deferral, 10% or 30% rural step-up).

Realized gain

$1,200,000

Deferred under §1031

$900,000

Cannot also go into a QOF.

Boot you can invest in a QOF

$300,000

Last day to invest (day 180)

April 30, 2027

Simplified: cash boot only. Paying off a mortgage on the relinquished property without taking on equal new debt is also boot, and any §1245 depreciation recapture taxed as ordinary income is not eligible capital gain. Exchanges that span two tax years can move the recognition date. Not tax advice.

For the full walk-through, read 1031 exchange vs Opportunity Zone, and check your exact date with the 180-day rule calculator.

FAQ

What is the difference between a 1031 exchange, a DST and an Opportunity Zone fund?

A 1031 exchange defers gain on real property by reinvesting the proceeds in like-kind real property (IRC §1031). A Delaware statutory trust (DST) is one kind of replacement property: Rev. Rul. 2004-86 says a DST interest can be treated as a direct interest in real estate for §1031. An Opportunity Zone fund defers any capital gain, not just real estate, if the gain is invested in a Qualified Opportunity Fund within 180 days (IRC §1400Z-2), and can exclude the fund's appreciation after 10 years.

Can I combine a 1031 exchange and an Opportunity Zone investment?

Yes, but only for gain the exchange does not defer. Cash you keep (boot) is recognized gain under §1031(b), and recognized capital gain can be invested in a QOF within 180 days. The gain deferred by the 1031 is not recognized, so it cannot also be deferred in a QOF.

Do I have to reinvest the whole sale price?

For a fully tax-deferred 1031 exchange, yes: anything not reinvested is boot. For an Opportunity Zone fund you invest only the gain, not the return of your basis.

Is a DST taxed differently from a 1031?

No. A DST bought as 1031 replacement property gets the same deferral. The difference is practical: a DST is a passive, sponsor-managed interest, and under Rev. Rul. 2004-86 the trustee cannot accept new contributions once the offering closes, renegotiate leases or reinvest sale proceeds.