1031 Crowdfunding 2026: What Qualifies (Fundrise No, DSTs Yes)

Corrected October 16, 2026 — Fundrise prospectus date. Earlier versions of this page gave the date of the Fundrise Flagship and Income prospectuses as April 29 or April 30, 2026. Both are dated May 1, 2026: EDGAR accepted each Form 486BPOS on the evening of April 29, gave it a filing date of April 30 and made it effective on May 1 (Flagship filing index, Income filing index). The fee figures cited are unchanged.

Corrected October 9, 2026 — Opportunity Zone dates, DST accreditation and who 1031 Crowdfunding is. (1) We wrote that governors would nominate new Opportunity Zones "in July 2026"; the statute starts a 90-day nomination period on July 1, 2026 and the IRS says an extension can run it to October 28, 2026, with zones designated this year taking effect January 1, 2027. (2) The comparison table said accreditation is "not required" for both paths; it is not required for a direct-property exchange, but DST interests are Regulation D private placements sold to accredited investors, and most opportunity funds are also private placements. (3) The FAQ called 1031 Crowdfunding a FINRA-registered broker-dealer; the firm's own disclosure says it is not one and sells through Capulent, LLC. (4) The Form D tally for its affiliated entities is now 17 entities, $156,621,349 sold to 575 investors.

The Short Answer Most Content Gets Wrong

If you've been googling "1031 exchange Fundrise" or "1031 exchange crowdfunding," you've probably found a lot of articles that dance around the answer. Here it is directly:

Fundrise says so themselves. From their help center: "Stocks or shares (such as shares of Fundrise eREITs or eFund) are expressly excluded from Section 1031 treatment."

The same is true for Arrived Homes shares, EquityMultiple LLC interests, CrowdStreet investments, Groundfloor notes, and virtually every other standard real estate crowdfunding platform. When you invest in these platforms, you receive a security — a financial interest, not a deed to real property. The IRS's current definition of "like-kind" exchange (post-Tax Cuts and Jobs Act 2017) applies only to real property.

The path that does work is different from what most people imagine. It involves specific legal structures — primarily Delaware Statutory Trusts (DSTs) — and, if you want a platform specifically built for this, there's a company called 1031 Crowdfunding.

What the IRS Actually Requires

Under Section 1031 of the Internal Revenue Code, you can defer capital gains taxes when you sell investment property and reinvest in "like-kind" real property within specific time limits.

Post-2017 rule (current): Like-kind applies only to real property. Machinery, vehicles, artwork, and — critically — securities are all excluded. LLC membership interests, limited partnership interests, REIT shares, and other financial instruments are not eligible regardless of what they invest in.

The test is simple: Does the investor hold a direct ownership interest in real property? DSTs and TICs say yes. Standard crowdfunding platform investments say no.

Delaware Statutory Trusts: How They Actually Work

DSTs are the primary vehicle that makes "1031 + hands-off investing" actually work. Think of a DST as crowdfunding's more conservative, IRS-compliant cousin.

The structure: A Delaware Statutory Trust holds a single commercial real estate asset — typically an institutional-grade property like a multifamily complex, medical office building, net-lease retail center, or industrial warehouse. The trust issues beneficial interests to investors. Each investor holds a fractional interest in the trust, which holds the property. The IRS confirmed this qualifies as like-kind real property in Revenue Ruling 2004-86.

Why DSTs work for 1031 exchanges:

• For federal income tax purposes, investors are treated as owning an undivided interest in the real estate (Rev. Rul. 2004-86); the interests are still sold as Regulation D private placements
• Professional management handles operations — 100% passive for investors
• 1031 Crowdfunding says many of its clients close in as little as 3–5 days, which matters for the 45-day and 180-day deadlines; the time varies by offering
• You can split a large exchange across multiple DSTs for diversification

DST Costs (The Part Nobody Leads With)

DSTs carry significantly higher fees than standard real estate crowdfunding platforms. Be clear-eyed about this:

• Selling commissions (Form D Item 12): across the 90 DSTs whose 2026 Form D we read, the median is 7.00% of the offering, the range 0.00% to 10.27% (our DST fee analysis, September 22, 2026)
• Money to the sponsor and related persons (Form D Item 16): comes on top. Inspired Senior Living of Beaverton DST (Form D, accession 0002076206-25-000001) discloses $3,417,636 of sales commissions on a $37,973,742 offering (9.0%) and $569,607 to the sponsor for organization, offering and marketing (1.5%): 10.5% before a dollar reaches the property (our arithmetic). CF James Multifamily DST discloses 5.00% plus 12.13%, 17.13% combined
• Ongoing and disposition fees: asset-management, property-management and sale fees are in each private placement memorandum, not in Form D, so no public filing totals them
• Comparison: Fundrise's interval funds charge a 0.85% management fee, and total annual fund operating expenses are 1.78% (Flagship) and 2.13% (Income) per the prospectuses dated May 1, 2026 (this replaces an earlier flat 1% figure). A DST takes its load up front, commonly in the high single digits to mid-teens of the offering once Item 16 is added, plus ongoing fees.

The justification: you're getting instant access to institutional-grade properties, passive income with no management responsibility, and professional sponsor relationships. Whether that's worth a 7-17% upfront load is a legitimate calculation that depends on your alternatives.

DST Rules (what Rev. Rul. 2004-86 forbids the trustee to do)

Once a DST offering closes, no new contributions can be accepted, and Rev. Rul. 2004-86 treats the trust as an investment trust (not a business entity) only because the trustee lacks the power to:

1. Dispose of the property and acquire another one
2. Renegotiate the lease or enter into leases with other tenants (except on a tenant's bankruptcy or insolvency)
3. Renegotiate or refinance the debt
4. Invest cash received from the property other than in short-term debt obligations
5. Make more than minor non-structural modifications to the property not required by law

In the ruling's facts, cash is also distributed to the beneficial owners quarterly, less reserves.

These restrictions exist to protect the 1031 treatment. They also mean you have essentially no control over the asset once you invest.

DST Minimums and Hold Periods

• Minimum investment (cash/non-1031): As low as $25,000
• Minimum investment (1031 exchange): Typically $100,000 (some accept $25,000)
• Hold period: 7–10 years typical; some 5–7 years
• Accreditation required: Yes, in practice. DST interests are Regulation D private placements: Rule 506(c) requires every buyer to be accredited, and Rule 506(b) would allow at most 35 non-accredited buyers, which DST Form D filings almost never report (see our DST data)

The Company Called "1031 Crowdfunding"

There's a company in Irvine, California called 1031 Crowdfunding — and if you're searching for "1031 exchange crowdfunding platform," this is what you'll find. We have since read every Form D its affiliated entities have filed: see the full 1031 Crowdfunding review.

Founded in 2014 by Edward Fernandez (FINRA Series 6/7/24/63; 20+ years in real estate securities), the platform is a marketplace specifically built to connect 1031 exchange investors with DST offerings.

What they offer:

• 100+ concurrent DST offerings across multifamily, healthcare, industrial, retail NNN, and office
• Dedicated 1031 exchange management — they walk you through the Qualified Intermediary (QI) process, identification, and closing
• Legal opinion attestations on 1031 compliance per offering
• Also offers REITs for non-1031 investors (lower minimums, non-eligible)

Track record (updated August 20, 2026): the firm now advertises $8.1 billion in combined real estate transactions, $2.8 billion in total equity raised and 2,800+ completed 1031 exchange transactions — up from the $3.4B / $2.1B / 1,800+ figures this page previously carried. Note what those numbers do and do not cover: the Form D filings of the 17 entities EDGAR ties to 1031 Crowdfunding report $156,621,349 actually sold to 575 investors (latest Form D of each entity, filed through September 8, 2026), 33.4% of the capacity sought. The likely reconciliation is that the advertised totals include third-party sponsors' DSTs sold through the marketplace. The breakdown, deal by deal, is in our 1031 Crowdfunding review.

The honest negatives:

• Same DST fee structure as the industry: selling commissions with a 2026 median of 7.00% of the offering, plus sponsor and related-person costs
• Some customer complaints about response times and follow-up
• Not exclusively a sponsor (they source deals from third-party sponsors) — due diligence varies by offering
• Fill rates vary enormously between offerings: of the 17 affiliated offerings on EDGAR, one reached 97.6% of target while six sit under 10% and two report zero raised. An under-raised DST carries the same property and fixed costs on a smaller equity base
• Increasingly facing competition from registered investment advisors who can source DSTs more cheaply (~5.25% fee savings vs. broker-dealer model)

Compared to buying a DST directly: 1031 Crowdfunding provides a broader marketplace with educational support, but the underlying economics are similar to working with other DST sponsors directly. If you're investing over $500,000, talking to an independent fiduciary advisor who can access DSTs on a fee-only basis may produce better economics.

Other Platforms With 1031-Eligible Offerings

RealtyMogul 1031: RealtyMogul operates a dedicated DST program for accredited investors. Their 1031 exchange page provides sponsor due diligence materials, offering documents, and the Qualified Intermediary coordination. Minimum investment varies by offering but is typically $25,000–$100,000.

Kay Properties: A DST marketplace (Kay Properties & Investments), not itself a broker-dealer: its website says securities are offered through FNEX Capital, a FINRA member (CRD 166316). It presents offerings from multiple sponsors, including Cove Capital Investments, a sponsor whose principals are also Kay Properties principals, and provides comparison analyses and investor education resources.

ExchangeRight: A DST sponsor (not a marketplace) with an exceptional track record — per its REIT's FY2025 10-K, all of its 126+ offerings are meeting or exceeding their cash-flow distribution projections. Also offers a DST-to-UPREIT pathway (see below).

What you won't find: Fundrise, Arrived, Groundfloor, EquityMultiple, or CrowdStreet offering 1031-eligible products through their standard platforms. These platforms would need to restructure investments as DSTs — which most have not done, as it would significantly constrain their investment flexibility.

The 721 Exchange: The Only Path from Property to Something Like a REIT

After a 1031 exchange into a DST, some investors want to eventually convert that position into something more liquid. There's a mechanism for this — but it ends the 1031 chain.

How the DST-to-UPREIT pathway works:

1. Complete a 1031 exchange into a DST (tax-deferred, qualifies)
2. When the DST sponsor decides to sell or recapitalize (typically 7–10 years), or, in some programs, when the REIT's purchase option opens (as early as month 24), some sponsors offer a Section 721 exchange: contribute DST interests to a REIT's Operating Partnership (OP) in exchange for OP units — also tax-deferred
3. OP units generate REIT-level dividend distributions
4. After a holding period (typically 1+ years), investors can redeem OP units for REIT shares or cash — this is a taxable event

The critical limitations:

• In most programs the REIT's acquisition of your DST is entirely at the REIT's discretion — it is not guaranteed (ExchangeRight, by contrast, offered DST holders a choice of cash, another 1031 exchange or 721 units)
• Once you hold OP units, they cannot be used in a future 1031 exchange — the deferral chain permanently ends
• Liquidity depends on the REIT's redemption program (may have gates, windows, and haircuts similar to BREIT)
• ExchangeRight (whose Essential Income REIT has raised its distribution five times and never cut it since 2019) and Hamilton Zanze are known sponsors who offer this DST-to-UPREIT pathway

Who this is for: Estate planning cases where the goal is to eventually pass assets to heirs with a stepped-up basis, which can erase the deferred gain at death. Two limits apply. Spouses holding as joint tenants (outside community-property states) get a step-up on only the half included in the first spouse's estate (26 U.S.C. 2040(b)(1)). And once the DST interest has become operating partnership units, the heirs' units are stepped up, but the partnership's own basis in its properties is adjusted only if a section 754 election is in effect (26 U.S.C. 743(a)), so ask the REIT whether it makes one. For that use case, the 1031 → DST → 721 → UPREIT → held-to-death path is a legitimate strategy.

Opportunity Zones vs. 1031 Exchanges in 2026 — Why 2026 Is a Critical Year

If you're planning a property sale in 2026, you should understand how these two programs interact before deciding which path to take.

Key Difference

The 2026 OZ Deadline

Under the original Opportunity Zone program, gain deferred into a qualified opportunity fund is included in income on the earlier of the date the investment is sold or December 31, 2026 (26 U.S.C. §1400Z-2(b)(1)(B) as it read before P.L. 119-21; IRS Notice 2026-40, section 4.01) — regardless of whether you've sold anything, for any investment made on or before December 31, 2026.

This is creating a significant tax event for investors who put capital gains into OZ funds under the original rules.

What changed: The One Big Beautiful Bill Act (signed July 4, 2025) made the OZ program permanent as "Opportunity Zones 2.0," for amounts invested in a qualified opportunity fund after December 31, 2026. The first new round is being designated now: governors' nominations run for 90 days from July 1, 2026 (to October 28, 2026 at the latest if a governor takes the 30-day extension), and zones designated this year are in effect from January 1, 2027 to December 31, 2036 (Rev. Proc. 2026-14).

For 2026 sellers: If you plan to sell a property in the second half of 2026, you can push your 180-day OZ investment window into early 2027 — accessing OZ 2.0 rules (deferral until the earlier of sale or 5 years, 10% basis step-up after 5 years, 30% for a qualified rural opportunity fund; IRS Notice 2026-40, section 4.02) instead of the original rule under which deferred gain is included on December 31, 2026.

When to Use 1031 vs. OZ

Use 1031 exchange into a DST when:

• You want to stay in real estate
• You want to reinvest the full sale proceeds (not just the gain)
• You have a large gain that would create a significant tax bill
• You're in a high-cost market and want geographic diversification into DST assets

Use an Opportunity Zone fund when:

• You're selling any capital asset (stocks, crypto, business, real estate)
• You only want to reinvest the gain portion (not full proceeds)
• You can genuinely hold for 10 years
• You want 100% tax-free appreciation — not just deferral

The Step-by-Step Process (For a $300K Sale)

Here's what the practical process looks like for a $300,000 real estate sale going into a DST via 1031 exchange:

Before the sale:

1. Engage a Qualified Intermediary (QI) before the sale closes. A QI is not the only safe harbor the regulations allow (Treas. Reg. §1.1031(k)-1(g) lists four), but it is the one almost every deferred exchange uses, and you cannot receive the proceeds yourself without invalidating the exchange. The QI holds the sale proceeds between the sale and the purchase. That is not the same as a qualified escrow (a separate safe harbor), and when the QI LandAmerica 1031 Exchange Services went bankrupt in 2008 the court treated exchange funds as property of its estate; see how to choose a qualified intermediary.

Day 0: Property closes. QI receives funds. The 45-day and 180-day clocks start simultaneously.

Days 1-45: Browse available DST offerings on 1031crowdfunding.com, RealtyMogul's DST platform, or directly with sponsors like ExchangeRight or Cove Capital (Kay Properties is a marketplace, not a sponsor). Identify up to 3 properties in writing and submit the identification to your QI before day 45.

Identification options:

• Three-property rule: Identify up to 3 properties regardless of value. Most investors use this.
• 200% rule: Identify any number of properties as long as total value is under 200% of the relinquished property value.

Days 1-180 (or your tax return due date for the year of the sale, if earlier, unless you extend it; 26 U.S.C. §1031(a)(3)): Execute the DST investment. The QI transfers your $300,000 to the DST sponsor. You receive your beneficial interest document (typically a trust certificate). You can split across multiple DSTs — $150,000 into a multifamily DST, $150,000 into an industrial DST, for example.

DST closing timeline: 1031 Crowdfunding says many of its clients close in as little as 3–5 days after submitting paperwork (the time varies by offering). That is far less stressful than racing to close on a traditional property purchase.

Result: $300,000 in capital gains deferred. Passive monthly or quarterly distributions from the DST's rental income. 7–10 year hold.

What Changed in 2026 (Updated May 5, 2026)

Three regulatory and market shifts since this article first published in April have changed the practical 1031-crowdfunding landscape. None of them flip the core IRS rule (securities still don't qualify; DSTs still do under Rev. Rul. 2004-86), but each one moves the what's actually available answer.

1. RealtyMogul's DST pipeline pause. RealtyMogul (the parent of MogulREIT I and II) paused both REITs to new investors on July 11, 2025 and on April 21, 2026 suspended Share Repurchase Programs on both REITs, with NAV at $6.85 for both as of March 31, 2026 (down 37.8% from MogulREIT I's peak and 31.5% from MogulREIT II's $10.00 issue price). Their DST offerings remain technically open but the platform's 2026 capacity for new DST investors is materially reduced. If you were planning a 45-day exchange identification using RealtyMogul's DST marketplace, confirm offering availability before the relinquished property closes — backup options matter more in 2026 than they did in 2024.

2. 1031crowdfunding.com inventory tightened. As of early May 2026, 1031crowdfunding.com lists fewer DST offerings than the same window in 2025. Issuers cite higher cap rates and tighter sponsor underwriting standards in the post-2024 commercial real estate stress cycle. Several DST sponsors that filed offerings in 2022–2024 quietly stopped issuing new ones during 2025. The 45-day identification window is harder to hit when the marketplace is thinner. Plan more time for due diligence and have 2–3 backup DSTs identified, not 1.

3. Opportunity Zones did not end: they were made permanent. P.L. 119-21 (July 4, 2025), section 70421, "Permanent renewal and enhancement of opportunity zones", replaced the one-time 2018 designations with new designations every ten years (the first determination date is July 1, 2026). The rules for deferring a gain into a QOF change between the old and new rounds, so a 1031-versus-OZ decision now depends on which round your gain falls in; see our opportunity zone fund data and get a tax adviser before choosing.

Practical implication. If you're triggering a 1031 in 2026, line up your Qualified Intermediary, your 45-day identification list, and your DST sponsor 30+ days before the relinquished property goes under contract — not after. Two years ago you could be sloppy and still close on time. The current marketplace doesn't reward it.

Is a DST 1031 Exchange Right for You?

DST exchanges make the most sense for a specific investor profile:

Good fit:

• Property owners who are tired of active management and want truly passive income
• Investors in high-cost markets who want geographic diversification
• Estate planning situations where the goal is to hold assets until death (a stepped-up basis can eliminate the deferred gain for heirs, subject to the joint-tenancy and partnership limits above)
• Investors with $100,000–$2,000,000 to exchange who want to meet the 45-day deadline without pressure

Poor fit:

• Investors who may need liquidity within 7–10 years
• Non-accredited investors (DSTs require accreditation)
• Investors who want control over their asset (DST investors have essentially zero management control)
• Investors comparing DST economics to low-cost real estate crowdfunding platforms — a 7-17% upfront load is a genuine drag that requires a realistic underwriting model to justify

Before committing to any DST exchange: consult with a 1031 exchange attorney and a tax advisor who can review the specific offering's fee structure, leverage levels, and UBTI exposure. The decision to defer taxes via 1031 is highly individual — sometimes paying the capital gains and reinvesting freely is the better outcome.

If you're exploring passive real estate investing without a 1031 trigger, our crowdfunding platform comparison and accredited investor guide cover the standard options. For property-level analysis, DealCheck runs ROI scenarios — code BESTDEAL for 20% off.

The 45-day identification and 180-day closing deadlines are unforgiving, which is one of the clearest cases for paid advice — we break down what a financial advisor actually costs a real estate investor, including why the share class you are placed in can cost more than the advice itself.

On the cost side specifically, we parsed 141 DST Form D filings to find out what DST 1031 deals actually charge — selling commissions alone run from 5.00% to 11.20% depending on the sponsor.