Part 8 — Under­stand­ing Your DST Tax Pack­age

DST.EDU Spe­cial Series

Octo­ber 27, 2026

By Al DiNi­co­la, AIF®
Pri­vate Fund Advi­sor
DST 1031 Spe­cial­ist
Fidu­cia­ry Cap­i­tal Man­age­ment, LLC

What Investors and Their CPAs Need to Know About DST Tax Report­ing

One ques­tion I hear from investors when they open a DST tax pack­age is:

“Why did I receive a 1099 along with the Grantor Trust Tax Infor­ma­tion State­ment?”

The short answer is that a DST tax pack­age can con­tain more than one type of tax doc­u­ment. Depend­ing on the struc­ture, the assets involved, and the report­ing method, an investor may receive a Grantor Trust Tax Infor­ma­tion State­ment togeth­er with one or more Forms 1099. Two forms worth under­stand­ing are Form 1099-INT and Form 1099-MISC.

Here’s the impor­tant part: receiv­ing one of these forms does not mean it tells the entire tax sto­ry for the DST.

Form 1099-INT: Interest Income

Form 1099-INT is gen­er­al­ly used to report inter­est income that is sub­ject to the applic­a­ble infor­ma­tion-report­ing require­ments. At first, that may seem unusu­al in a real estate invest­ment.

An investor might rea­son­ably ask:

“Why would my DST have inter­est income if I invest­ed in real estate?”

There can be cir­cum­stances in which cash asso­ci­at­ed with the trust earns inter­est, depend­ing on the struc­ture and the activ­i­ty occur­ring dur­ing the year.

For illus­tra­tion, a DST-relat­ed tax pack­age might include a Form 1099-INT show­ing:

Inter­est income: $425

Fed­er­al income tax with­held: $0

Tax-exempt inter­est: $0

That $425 is a sep­a­rate tax item. It should not auto­mat­i­cal­ly be treat­ed as the same thing as rental income or cash dis­tri­b­u­tions from the prop­er­ty.

The investor should pro­vide the form to the CPA along with the rest of the tax pack­age.

Form 1099-MISC: Why It May Appear

Form 1099-MISC is anoth­er infor­ma­tion return investors may rec­og­nize.

Among oth­er cat­e­gories, the form can be used in con­nec­tion with reportable rent pay­ments when applic­a­ble.

A sim­pli­fied DST illus­tra­tion might show:

Rents: $4,542

Oth­er income: $0

Fed­er­al income tax with­held: $0

But this is where I would be care­ful.

Do not assume that every DST will issue a Form 1099-MISC show­ing rents. Do not assume that every investor will receive both a 1099-INT and a 1099-MISC. And do not assume that the absence of either form means the tax pack­age is incom­plete.

The report­ing method can dif­fer from one DST to anoth­er.

The Grantor Trust Statement May Be the Main Document

As we dis­cussed ear­li­er in this series, many DST investors receive a Grantor Trust Tax Infor­ma­tion State­ment or sim­i­lar own­er state­ment.

That doc­u­ment may pro­vide the investor’s applic­a­ble infor­ma­tion for rental income, mort­gage inter­est, real estate tax­es, oper­at­ing expens­es, depre­ci­a­tion, and oth­er tax items.

Depend­ing on the report­ing method, some of the infor­ma­tion may also be reflect­ed on Forms 1099.

That is why I encour­age investors to think about the tax pack­age as a group of relat­ed doc­u­ments rather than a col­lec­tion of com­plete­ly sep­a­rate trans­ac­tions.

A 1099 may be one piece of the pack­age.

It may not be the whole pack­age.

Watch Out for Double Counting

This is prob­a­bly the most impor­tant prac­ti­cal point in this arti­cle.

Sup­pose you receive a detailed own­er state­ment and a Form 1099.

An investor might look at the own­er state­ment, see an income amount, then look at the 1099 and see anoth­er amount and assume the two should auto­mat­i­cal­ly be added togeth­er.

That may not be cor­rect. The amount report­ed on one doc­u­ment may already be reflect­ed in anoth­er part of the pack­age, depend­ing on the sponsor’s report­ing method. That is why I would not rec­om­mend inde­pen­dent­ly adding every num­ber that appears on every tax form.

Give all of the doc­u­ments to your CPA. Let the tax pro­fes­sion­al deter­mine whether the amounts are sep­a­rate items or whether one doc­u­ment is sup­port­ing infor­ma­tion for anoth­er.

More Forms Do Not Necessarily Mean More Income

Anoth­er mis­con­cep­tion is that receiv­ing sev­er­al tax forms auto­mat­i­cal­ly means the investor had sev­er­al sep­a­rate sources of tax­able income.

Not nec­es­sar­i­ly. Some­times mul­ti­ple doc­u­ments sim­ply reflect the way the spon­sor or report­ing enti­ty sat­is­fied dif­fer­ent infor­ma­tion-report­ing require­ments.

The num­ber of forms does not deter­mine the amount of tax­able income.

The under­ly­ing activ­i­ty and the applic­a­ble tax rules do.

So if your DST pack­age con­tains a Grantor Trust Tax Infor­ma­tion State­ment, a Form 1099-INT, and anoth­er infor­ma­tion return, do not try to rank them by impor­tance or select only the form that looks most famil­iar.

Keep them togeth­er.

Why the Full Package Matters

This con­nects with one of the main themes of the DST.EDU series:

Do not pull one famil­iar tax form out of the pack­age and dis­card the rest.

Your CPA may need the own­er state­ment, 1099s, depre­ci­a­tion sched­ules, state infor­ma­tion, and oth­er sup­port­ing doc­u­ments to under­stand the com­plete pic­ture.

For exam­ple, a Form 1099-MISC show­ing a rental-relat­ed amount does not explain the investor’s depre­ci­a­tion allo­ca­tion. A Form 1099-INT does not explain the property’s real estate tax­es or oper­at­ing expens­es.

Each doc­u­ment may answer a dif­fer­ent ques­tion.

The com­plete pack­age helps the CPA deter­mine how the pieces fit togeth­er.

Keep the Investments Separate

If you own mul­ti­ple DSTs, good orga­ni­za­tion becomes espe­cial­ly impor­tant.

You may receive a 1099 from one invest­ment, a Grantor Trust Tax Infor­ma­tion State­ment from anoth­er, and a dif­fer­ent com­bi­na­tion of forms from a third.

I rec­om­mend keep­ing every doc­u­ment with the DST that gen­er­at­ed it.

Use the prop­er­ty name, spon­sor name, and tax year in your dig­i­tal file names. That can help both you and your CPA avoid mix­ing infor­ma­tion from dif­fer­ent invest­ments.

A Good Question to Ask Your CPA

If your pack­age con­tains sev­er­al forms, a use­ful ques­tion is:

“Are any of these amounts report­ed in more than one place, and have I giv­en you every­thing you need to avoid dou­ble count­ing?”

That is a much bet­ter approach than try­ing to rec­on­cile the doc­u­ments your­self.

The Bottom Line

Forms 1099-INT and 1099-MISC may appear in a DST tax pack­age, but they are not nec­es­sar­i­ly issued in every DST or every year.

Form 1099-INT gen­er­al­ly relates to reportable inter­est income.

Form 1099-MISC may appear in con­nec­tion with cer­tain reportable pay­ments, includ­ing rents when applic­a­ble.

But nei­ther form should auto­mat­i­cal­ly be viewed in iso­la­tion.

The Grantor Trust Tax Infor­ma­tion State­ment and sup­port­ing sched­ules may con­tain addi­tion­al infor­ma­tion need­ed to under­stand the investor’s tax activ­i­ty.

The safest approach is sim­ple: keep the entire pack­age togeth­er and give it all to your tax pro­fes­sion­al.

Investor/CPA Takeaway

Forms 1099 may be part of the DST tax pack­age, but they may not tell the whole tax sto­ry. Give your CPA every form and sup­port­ing state­ment you receive so the infor­ma­tion can be reviewed togeth­er and poten­tial dou­ble count­ing can be avoid­ed.

In Part 9 of our DST.EDU series, we will look at:

From the DST Tax Pack­age to Sched­ule E: What the Investor Gives the CPA.

References

Inter­nal Rev­enue Ser­vice. Form 1099-INT, Inter­est Income, and relat­ed instruc­tions.

Inter­nal Rev­enue Ser­vice. Form 1099-MISC, Mis­cel­la­neous Infor­ma­tion, and relat­ed instruc­tions.

Educational Note

This arti­cle is intend­ed sole­ly for gen­er­al edu­ca­tion­al and infor­ma­tion­al pur­pos­es. It is not indi­vid­ual tax, legal, secu­ri­ties, or invest­ment advice. DST report­ing meth­ods and tax doc­u­ments can vary by invest­ment, spon­sor, prop­er­ty, own­er­ship struc­ture, and investor cir­cum­stances. Investors should pro­vide their com­plete DST tax pack­age to their CPA or oth­er qual­i­fied tax pro­fes­sion­al.

Delaware Statu­to­ry Trusts (DSTs) have become a notable part of com­mer­cial real estate invest­ing. As Al DiNi­co­la empha­sizes, a DST is a struc­ture, not an asset class, the focus should remain on the qual­i­ty of the under­ly­ing prop­er­ty and how it fits your goals.  DSTs are for accred­it­ed investors and car­ry risks, i.e. illiq­uid­i­ty, real estate mar­ket fluc­tu­a­tions, and spon­sor deci­sions. Con­sult your advis­er about suit­abil­i­ty, espe­cial­ly for §1031 exchanges. For more details, please con­tact:

• Al DiNi­co­la adnicola@fiduciarycm.com  
• Direct: 239 691 8098
• Sched­ule Appoint­ment

Advi­so­ry ser­vices are offered through Fidu­cia­ry CM, an SEC-reg­is­tered advis­er. Invest­ments involve risk and are not guar­an­teed. Always refer to offer­ing doc­u­ments for full risk dis­clo­sures. Delaware Statu­to­ry Trust (DST) invest­ments involve risks asso­ci­at­ed with com­mer­cial real estate own­er­ship and are not suit­able for all investors. These risks may include, but are not lim­it­ed to, loss of prin­ci­pal, illiq­uid­i­ty, ten­ant vacan­cy, financ­ing risk, inter­est rate fluc­tu­a­tions, prop­er­ty val­ue declines, eco­nom­ic and mar­ket con­di­tions, and risks asso­ci­at­ed with spon­sor and prop­er­ty man­age­ment deci­sions. Please refer to the applic­a­ble Prop­er­ty Pri­vate Place­ment Mem­o­ran­dum (PPM) for a com­plete dis­cus­sion of the risks and con­sid­er­a­tions spe­cif­ic to that offer­ing. Secu­ri­ties-relat­ed activ­i­ties, where applic­a­ble, are con­duct­ed through the author’s then-cur­rent reg­is­tered bro­ker-deal­er, mem­ber FINRA/SIPC. Cur­rent reg­is­tra­tion infor­ma­tion is avail­able through FINRA Bro­kerCheck. Past per­for­mance is not indica­tive of future results. Nei­ther the Reg­is­tered Rep­re­sen­ta­tive nor the Bro­ker-Deal­er can con­trol or guar­an­tee future deci­sions made by the DST spon­sor, asset man­ag­er, prop­er­ty man­ag­er, ten­ants, lenders, or oth­er third par­ties involved in the oper­a­tion of the prop­er­ty. Past per­for­mance is not indica­tive of future results. For edu­ca­tion­al pur­pos­es only; not tax, legal, secu­ri­ties, or invest­ment advice and not an offer or solic­i­ta­tion to buy or sell secu­ri­ties.