So, a total tax bracket of approximately 35%, could result in a capital. In this case, that’s $250,000, so the entire sum would be subject to tax. If the investor decides not to do a 1031 exchange and no other tax exemptions apply, tax would be owed on the $400,000. (For example, if the Taxpayer's mortgage is paid off, he has "received" boot; if he assumes another party's mortgage, he "pays" boot. 2016 Boot in a 1031 Exchange - What it is & How to. Our intermediaries help clients throughout the state of Minnesota and around the country. Contact our 1031 exchange professionals today to learn more about the tax-saving benefits of a 1031 exchange. For example, if you sell a property for $200,000. 25. These calculations are estimates for the purpose of demonstration. However, the exchanged properties must be held for productive use in a trade. Typically, boot comes in the form of cash. Mortgage Boot. This can happen if the exchanger fails to acquire some or all of their replacement properties, leaving cash boot in the hands of the. The profit is subject to taxation. 2. Additionally, this article will clarify some common misconceptions about 1031 exchanges. us. "ÐÏ à¡± á> þÿ þÿÿÿþÿÿÿ ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿHow Cash/Equity Boot is Generated in a 1031 Exchange . We generally conform to IRC section 1031 as revised by the Tax Cuts and Jobs Act of 2017. However, for exchanges completed after January 10, 2019, exchanges are limited to real property unless the taxpayer meets the provision of RTC sections 19031. We're a Qualified Intermediary and provide Like-Kind Exchange services to businesses and individuals nationwide. The Exchanger can quickly calculate whether there will be recognized gain based on the following principles: Taxable “boot” is defined as non-like-kind property the Exchanger may receive as part of an exchange. Cash received (equity boot) or debt not replaced (mortgage boot) is taxable. Section 1031 (a) (1) states that: “No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or. We don't think 1031 exchange investing should be so difficult. In that context, the net amount paid to the seller for the property at closing is simply. Cash boot. Definition. Step 3: Identification Period. Defer the tax. 37. If a 1031 exchange is performed, it is any amount purchased less than the net sale OR any amount of cash taken from the net proceeds (often referred to as "boot"). Constructive Receipt. For your convenience we list current Boydton mortgage rates to help real estate investors estimate monthly loan payments & find local lenders. You complete the exchange by purchasing a $500,000 property with a mortgage of $350,000. There are many guidelines that you have to be aware of when doing a reverse like-kind exchange. The latter method is typically what real estate investors pursue due to its simplicity, but they. However, she can only locate new property with a sales price of $800,000. Step 5: Enjoy a fully tax deferred exchange. 8 NIIT for a total. The two main kinds of boot in a partial 1031 exchange. (-) Original Tax Basis $850,000. Start Your Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. Avoiding Boot in a 1031 Exchange You can avoid mortgage boot by following the debt reduction principle, a safeguard to help you determine whether you’ve completed a qualifying exchange. Cash boot is when the difference in value between the two. But in a like-kind exchange, gain or loss on the sale of. non-like kind property you received during the transaction). Learn what boot is and how it’s taxed in a 1031 exchange. Both properties must be similar enough to qualify as "like-kind. Topics. In the above example, taxpayer has. They also can exchange. Disclaimer: Crefcoa's 1031 exchange calculator is used to help estimate the deferment realized by performing a 1031 exchange rather than selling the property and incurring a taxable event. The 1031 exchange is in effect a tax deferral methodology whereby an investor sells one or several “relinquished properties” for one. However, investors can opt-out of two schedule depreciation and depreciate the calculated cost basis on a single schedule. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. 1. I. Upon review, you'll notice that the form has four parts. Deferred exchanges are more complex but allow flexibility. 400 W. 1031. You may offset mortgage boot with cash, but you cannot offset cash boot with additional mortgage. 1031 exchange investors can exchange into multiple DST investments at the exact amounts needed to satisfy the like-kind replacement requirement. (API) handled more than 5,000 exchanges in 2020. Like-Kind Exchange – The means of deferring federal (and, in most cases, state) capital gains and recaptured. 888. 1031 – Section 1031 of the Internal Revenue Code (I. Treas. Property used primarily for personal use, like a primary residence or a second home or vacation home, does not qualify for like-kind exchange treatment. *Federal Capital Gain s Tax is between 15-20% depending upon annual household income. To see a 1031 exchange example with both cash and mortgage boot, we’ll go back to our first example with a slight change. 3. ) Cash boot is. I. (We will explain what might count as an example “boot” in your. A Simple Rule to Remember. ”. Capital Gains Tax Calculator Use the below capital gains calculator to get a rough estimate of the capital g . A 1031 exchange is governed by Code Section 1031 as well as various IRS Regulations and Rulings. published June 21, 2023 In the context of a 1031 exchange, “boot” refers to the portion of a transaction that doesn’t meet the tax-free criteria and thus becomes subject to immediate capital. Fernandez explains how investors can avoid paying tax on proceeds of a sale and how DSTs can be a lucrative option. The Form 8824 is due at the end of the tax year in which you began the transaction, as per the Form 8824 Instructions. The two most common types of boots that a real estate investor. Click here to use our capital gains calculator. Includes state taxes and depreciation. 1031 exchange trends. This calculator should not be relied upon for final decision making. There are two types of boot, and the type of boot affects the answer. Regulations sections 1. Section 1031 provides that “No gain or loss shall be recognized if property held for use in a trade or business or for investment is exchanged solely for property of like kind. (For example, if the Taxpayer's mortgage is paid off, he has "received" boot; if he assumes another party's mortgage, he "pays" boot. Start Your Exchange: If you have questions about mortgage boot, feel free to call me at 612-643-1031. This calculator will help you to determine the tax deferment you will realize by performing a 1031 section like-kind exchange rather than a taxable real estate sale. The $100,000 is not part of the tax deferred exchange. START AN EXCHANGE. Boot is any non like-kind payment received as part of an exchange. 00 0. 5 years, and 2) begin a new 27. Buying Down in Value Example: Lila is selling her rental townhouse for $1,000,000 and plans to utilize a 1031 Exchange to defer her taxes. EisnerAmper - Tax Trap Resulting from Debt in an IRC Section 1031 Exchange. The excess funds from the exchange can be used for any reason you want since they will be taxed. The criteria for a 1031 exchange is that the property must be held for investment or for use in a trade of business. To get started, you’ll want to download IRS Form 8824 from the IRS website. Regardless, in order to avoid boot, you generally need to secure replacement property that has the same (or higher) fair market value as that of the relinquished property. Cash boot is allowed to be part of a nonmonetary exchange under U. Internal Revenue Code. It’s possible to conduct a successful 1031 exchange, but still owe some capital gains tax on the transaction — when this happens, the taxable portion of the deal is. Cash boot, such as when you elect not to reinvest all of the proceeds from your sale into your new property. According to a July 2020 report from the National Association of Realtors: 61% of realtors have handled at least one 1031 exchange transaction since 2016. Original purchase price of property. A Delaware Statutory Trust (DST) is a trust formed under the Delaware statutory trust law that allows passive, fractional ownership in real estate while qualifying as a “like-kind” real estate replacement property under Section 1031. The gain is considered an unrecaptured section 1250 gain, and it is. S. Analyze Purchase Without An Exchange. Seller financing comes up most frequently where the seller is the taxpayer under an exchange, and the taxpayer is providing some seller financing to the buyer. In order to keep the process moving forward, the goal is to purchase the first of three potential properties within 45 days of the original sale. Cash, personal property, or a reduction in the mortgage owed after an exchange are all boot and subject to tax. 1031 Exchange Alternatives if You Want to Back Out After Starting the Process Mar 21, 2022. Estimate the realized and recognized gains to calculate the transfer basis. Form 8824 Worksheet is a useful tool for preparing the tax return of a 1031 exchange, a transaction that allows you to defer capital gains taxes on the sale of an investment property. The 1031 Exchange Equation. Additional contributions by investors cannot be made once the DST offering is closed. Boot is cash or other property added to an exchange or other transaction in order to make the value of the traded goods equal. A 1031 Exchange is a transaction approved by the IRS allowing real estate investors to defer the tax liability on the sale of investment property. By doing this you avoid reporting all of ar at least a portion of the taxable gain of the sale on your current tax return. 1031 Exchange. The Ultimate Guide to a 1031 Exchange Involving a Primary Residence. In this article, we are going to talk about the best way to determine if your property can be used inAvoid Boot from Rent and Security Deposits in a 1031 Exchange. Sold later absent an 1031 Exchange for $585,000, e. For instance, if you sell a property for $500,000 but only reinvest $425,000, your. Capital Gains Calculator. 15th Street Suite 700. Typical examples of 1031 exchange boot include: 1. 00 0. This calculator is designed to calculate recognized loss, gains and the basis. This means that your adjusted cost basis is $213,636. Reporting your 1031 Exchange on Form 8824. The term boot refers to non-like-kind property received in an exchange. A subsidiary of Stewart Title Company, Asset Preservation, Inc. However, under the Tax Cuts and Jobs. The 411 on §1031 Exchanges. 2016 Boot in a 1031. Ms. Mortgage boot in a partial 1031 exchange Mortgage boot is incurred when you fail to replace the value of the mortgage relief generated from the sale of the sold property. The company’s sizable staff, which includes many Certified Exchange Specialists, goes above and beyond to work with California investors, including offering clients a “letter of assurance” that. A 1031 exchange is not an all or nothing deal, and you can complete a partially tax deferred exchange; but you will probably recognize gain to the extent that you buy down in value. You are allowed to receive money during the course of a 1031 exchange. Requires only 10 inputs into a simple Excel spreadsheet. The main difference is that the property you’re exchanging into (i. If you want to meet the conditions for a 1031 exchange, you much. In response to recent winter storms in California causing flooding and mudslides, the IRS has announced tax relief for those. The small vanilla single 1-to-1 exchange where you’re selling one relinquished property in a standard deferred exchange and acquiring one replacement property might cost between $850. For investors, there are two major benefits to a partial 1031 Exchange, cash and reducing debt levels. Calculating the cost basis for a 1031 exchange is similar to calculating the cost basis on the sale of a single home up to a point. 2016 Boot in a 1031 Exchange - What it is & How to Avoid it Oct 6, 2016. We’ll be happy to help you with calculating your 1031 Exchange, please give us a call 215-489-3800. To pay no tax when executing a 1031 Exchange, you must purchase at least. A Taxpayer Must Not Receive "Boot" from an exchange in order for a Section 1031 exchange to be completely tax-free. In this case, you calculate your new basis by subtracting the capital gains deferred ($130,000) from the purchase price of the new property ($500,000), leaving you with a new cost basis of. This usually applies to property exchange without mortgage. Austin, TX 78701. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. While capital-gains tax rates are currently at historical lows, tax rules require you to recapture the portion of the gain on the sale that relates to allowable depreciation over the period the asset was held. g. Less original purchase price plus capital improvements. In a 1031 exchange, boot is taxable and is something you want to avoid to maximize your tax deferment savings. Let’s Dive Deeper into What is a Cash Boot in a 1031 Exchange. Any boot received is taxable (to the extent of gain realized on the exchange). Say you paid $20,000 for a piece of business or investment real estate and sold it for $30,000 ($30,000 - $20,000 = $10,000 capital gain). Use this calculator to estimate your tax deferment for a 1031 exchange, a tax-free swap of investment or business assets for similar ones. This is EXTREMELY important: if you try. For more on how a boot might be used in a 1031 exchange, either via cash proceeds or a reduction in debt or a mortgage, speak to our advisors at 888-993-2835 or email us at info@1031xchange. Lines 26-38 Not applicable to 1031 exchanges WorkSheet #10 for Buy-Down only. (1) Federal Capital Gains equal to Realized Gain less depreciation taken multiplied by the applicable rate. Navigating 1031 exchange options takes a professional, and you can count on the whole team at Equity Advantage to help. Download the Excel file and follow the instructions to calculate the adjusted basis, realized gain, recognized gain, and deferred gain of your exchange. Is created when the value of the replacement property is less than the value of the property being relinquished or sold. Consider the scenario where you sell a fully paid-off investment property worth $500k. Many factors are involved in calculating taxes, including factors unique to each taxpayer. Our team reveals the best 1031 exchange companies in California and explains the rules and regulations that govern 1031 exchanges in the state. 1031 Property Exchange for Excel is designed for investors, real estate brokers and facilitators allowing to: Balance equities. rules: Rule 1: The replacement property must have an equal or greater acquisition. Defer the tax. The majority of legal counsel, tax advisors and Qualified Intermediaries believe to this day that you are required to replace the same. But, even this can get complicated if the taxpayer has to report some 25% rate gain on the 1031 exchange as a result of receiving boot (see below), in which case the Unrecaptured Section 1250 Gain may not be the same as the accumulated depreciation shown on the replacement property depreciation schedule. Each property is owned by a different LLC, each LLC has the same common single member LLC as it’s member. You can choose to use some of the money from a property. It’s an excellent paired resource in understanding the 1031 exchange. Here are a few of the most important rules: 180 Day Time Period. For example, if you sold your relinquished property in 2008 and subsequently acquired your like kind replacement property in 2009 your 1031 exchange would be reported on your 2008 Federal income tax return. The first is when the “clock” starts, which is when your old property is transferred the buyer. A 1031 exchange gets its name from IRC Section 1031 which allows you to avoid paying taxes on any gains when you sell an investment property and reinvest the proceeds into a new investment property. However, it is important to note that receipt of boot will not completely disqualify a 1031 exchange. 899. Defer the tax. Without the proper planning and precautions, 1031 exchanges can fail. START AN EXCHANGE. Say you paid $20,000 for a piece of business or investment real estate and sold it for $30,000 ($30,000 - $20,000 = $10,000 capital gain). Likewise, if the taxpayer is relieved of any debt resulting from the Sec. $ 7,273. In the first scenario described above, the married couple is able to take their $1. 3%. In a sale, tax is paid on the realized gain. Under this approach, the investor would calculate their total deductions using two depreciation schedules: 1) continuation of the depreciation of $70,000 from the sold property for the remaining 17. Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031. IR-2020-262, November 23, 2020. We’ll be happy to help you with calculating your 1031 Exchange, please give us a call 215-489-3800. S. " Boot is what the IRS calls the "taxable part" of a 1031 exchange. In the first scenario, investors are able to take cash out of a property. For example, you may sell a property for $500,000 and buy a replacement property for only $400,000. Discover the benefits and drawbacks of combining a 1031 exchange and installment sale. Let’s say our investor wants to take out $100,000 of cash from the sale of the relinquished property. Home About 1031 Exchange Services. Exchangor arranges for all financing for the acquisition of the replacement property. Cost of capital improvements info_outline. Original purchase price of property. A partial exchange allows you to retain. The investor could sell the relinquished property for $1 million, take $100,000 of the cash equity, reinvest the remaining. Amount of yearly depreciation info_outline. 12% of all sales transactions between 2016-2019 by realtors were 1031 exchanges. $. Unrecaptured Section 1250 Gain: The unrecaptured section 1250 gain is a type of depreciation-recapture income that is realized on the sale of depreciable real estate . Properties held in a DST can be located anywhere in the U. 45 / 180 Day Calculator Capital Gains Calculator 1031 Glossary. Boot is basically any non-like-kind property you receive during a 1031 exchange. Contact us today at our downtown Minneapolis office to learn more about the 1031 process, our services, and to see if you are a good candidate for an exchange. 45 Day Deadline: A potential like-kind replacement property must be identified & shared with your. And while this all might seem simple, one thing that can make it challenging apart from the rules and timelines is avoiding boot. Certificates of Occupancy & 1031 Improvement Exchanges Oct 11, 2022. This is where an improvement 1031 exchange comes into play. The unrecaptured section 1250 gain of $21,000 is subject to the investor’s ordinary. O’Connell will have to pay taxes on the $10,000. Mortgage Boot. Learn the rules, rates, and benefits of 1031 exchanges, and see examples of how. However, if the Exchanger has $1,000,000 worth of net equity and trades into a building with only $900,000 of equity, the Exchanger. Quite often people mistakenly get these boots included in their 1031 exchange, and they unfortunately will end up with a capital gain tax bill. S. Contact us today to schedule a time to chat with one of our intermediaries. "A DST is a real estate structure that allows multiple. [2] Depreciation to be recapture is the amount expensed annually in total, say $25,000 over two full years ($490,000 ÷ 39-year property times 2 years). A Taxpayer Must Not Receive "Boot" from an exchange in order for a Section 1031 exchange to be completely tax-free. The Limitations of a 1031 Construction Exchange Oct 13, 2022. Properties must be “like-kind”. This property exchange takes its name from Section 1031 of the Internal Revenue Code (IRC). Here are the important numbers for the property being sold. TAXES DUE (Effective Tax Rate)4. The primary concept of a traditional §1031 exchange is that one property is swapped for another and deferring federal or state income tax on gains that could potentially be due in the case of a non-exchange sale. Eliminate leverage and debt. In a standard 1031 exchange, you need to reinvest 100% of the proceeds from the sale of your relinquished property to defer all capital gains taxes. Also. 34,308. Like-kind properties, according to the IRS, are properties of the same nature, character, or class. *Federal Capital Gain s Tax is between 15-20% depending upon annual household income. 5(b) or 24941. 1031 exchanges should be reported using IRS form 8824. A 1031 exchange is a transaction in which eligible property is exchanged for property of like-kind and gain or loss is deferred for federal income tax purposes. Applying section 1. You can 1031 exchange the $300,000 into the replacement property, generating a tax bill on the $20,000 boot. Usually, boot is in the form of cash, an installment note, debt relief or personal property and is valued to be. It does not appear that Turbotax makes this calculation for you, nor, does it know to adjust the values in Form 4797 for the reductions for the partially exchanged real estate. The following calculator is a useful tool to determine the capital gain tax . Original purchase price ($): Free, simple 1031 Exchange Capital Gains Calculator to help you estimate and calculate the reinvestment requirements for a tax-free exchange. To avoid taxable boot, the newly acquired property must be of equal or greater value than the relinquished property, and any mortgage on the replacement property should be of equal or greater debt. The determination of 1031. 2. There are two parts then to the sale: the $450,000. This calculator will help you to determine the tax deferment you will realize by performing a 1031 section like-kind exchange rather than a taxable real estate sale. Defer the tax. Whereas interest rates are at historic lows but commercial real estate prices are steadily increasing, taxpayers are increasingly interested in pursuing the tax-deferred exchange provisions of IRC Sec. 37. For example, if you sell a property for $200,000 but only re-invest $180,000, the $20K difference is known as boot. TX Location: 2106 E State Hwy 114 #407, Southlake, TX 76092. They can also prepare the documents necessary for your 1031. In order for a 1031 exchange to completely defer any capital. Contact us today to learn more about the extent of our services and to set up a time to chat with our intermediaries. Like-Kind Property: Any two assets or properties that are considered to be the same type, making an exchange between them tax free . Because capital gains taxes may have to be. 1031 exchange, the reduction in debt is considered taxable boot as well. After the sale of oil, gas, and mineral interests, a taxpayer then has 1031 days to purchase a new like-kind property with a 1031 exchange. The $100,000 difference is boot. 45 Day Deadline: Must identify potential like-kind replacement properties to the qualified intermediary no later than midnight of the 45th calendar day following the close of the relinquished property sale transaction. Cash boot happens when you don’t use all the proceeds from the sale of your property toward the. Read our informative article at 1031. I. WorkSheet #10 – Calculation of Recapture for Form 8824, Line 21A 1031 exchange means that an investor has reinvested the sale proceeds in a new like-kind property to defer all capital gain taxes. Post-1031 exchanges the tax code states that you must split depreciation into two separate schedules as the preferred method. Legal fees directly related to the exchange of your property would likely fall into this category. You will be taxed on $86,363. Like-Kind Exchanges Section 1031 regulations. Rather, only the amount of boot received by the. The purpose of a 1031 exchange is to encourage active reinvestment in the. Also file Form 8824 for the 2 years following the year of a related party exchange. 1031(a)-3, and 1. In a 1031 exchange, boot is the amount of proceeds you don’t reinvest in a replacement property. . A 1031 exchange, also called a Starker or Like-Kind exchange, is a mechanism to defer capital gains and other taxes on the sale of real property when the real property is replaced with real property of a similar use or kind (i. , cash, notes, or personal property not replaced). In this article, we are going to talk about how 1031 exchanges fail and how to avoid a failed 1031 exchange. Generally, if you make a like-kind exchange, you are not required to recognize a gain or loss. Accruit is the leading, independent, trusted managed service provider of 1031 Exchanges. Sold later absent an 1031 Exchange for $585,000, e. The recognition of cash “boot” triggers a taxable event for Taxpayer A. The IRS sees this $50,000 as value received from your 1031 exchange and will tax these funds because they did not contribute to the 1031 exchange. 3. INSTALLMENT SALE. Benefits. Defer the tax. 2016 Boot in a 1031 Exchange - What it is & How to Avoid it Oct 6, 2016. Minus New Loans: $375,000. November 3, 2022 / By David Moore / Blogcasts, News Boot is “unlike” property received in an exchange. The interesting thing is that a permanent conservation easement is eligible as a 1031 relinquished property. e. Example 1: Imagine you sell a property for $325,000 — $100,000 more than you originally paid — with $15,000 in closing costs. Since the depreciation recapture tax rate is 20% and capital gain tax rate is 15%, then: $250,000 x 20% = $50,000 (Amount of depreciation recapture that is taxed) $1,500,000 x 15% = $225,000 (Amount of capital gain that is taxed) The total. Sample escrow report (for Multiple 1031 Exchanges) Our Exchange Manager integrates the client’s financial data with our Section 1031 Exchange Taxable Boot Calculator to alert our staff and the client as to potential tax impact of the specific transaction and to take remedial action. API's Capital Gain Tax Calculator to calculate taxable gain and avoid paying taxes by taking advantage of IRC Section 1031. Contact CPEC1031 today to set up a time to chat with an experienced qualified intermediary about your like-kind exchange of real estate. Rule 2: The exchanger may not receive cash – all the proceeds in the qualified escrow account must be reinvested. In line with our previous example, let’s say you sell an investment property for $500k, and you paid off a remaining $200,000 on the mortgage. 09/09/2019. Lesser of boot or exchange expenses (Lesser of. 1031 Exchange Glossary. 1031(k)-1 implement statutory changes. A 1031 exchange, named after Section 1031 of the U. Includes state taxes and depreciation. Total boot in excess of exchange expenses (Line G - Line I) _____ _____ Carry to Line 15, Form 8824 WorkSheet #8 - Calculation of Basis of New Property for Form 8824, Line 18. 503-635-1031. Check out our blog content to learn more about 1031 exchanges. Diversification and sizing. The remaining gain of $175,000 is taxed at the long-term capital gains rate of 15% for a total of $26,250. A like-kind exchange allows you to avoid a big tax bill on the sale of real estate so long as you move those net proceeds into like-kind property. But the reality is that 1031 exchanges are not right for every single situation. There are two entries for the same property that was relinquished: 2392 Taproot Court 02/01/2010 05/08/2019 0. Long term capital gains for properties held more than one year are taxed at a lower rate than depreciation. Originally, investors were able to use 1031 exchanges to swap personal and intangible property as well as real estate. capital gains and depreciation recapture taxes apply to the $120,000 gain ($585,000 minus $465,000 cost basis). WorkSheet #10 – Calculation of Recapture for Form 8824, Line 21400 W. A 1031 exchange is a transaction in which eligible property is exchanged for property of like-kind and gain or loss is deferred for federal income tax purposes. At the termination of the exchange, following the receipt by the taxpayer of all like kind property the taxpayer was entitled to receive, the. You can find us at our primary offices in downtown Minneapolis. type of Section 1031 exchange is a simultaneous swap of one property for another. If the investor does not move forward with an exchange, then the transfer of property is a sale subject to taxation. Calculate Capital Gain Tax Due. WITHOUT a 1031 and WITH a 1031 Exchange (and WITHOUT or WITH "TAXABLE BOOT"). You must keep records of these exchanges and make them available upon request. Plug in the basic information requested for each field to learn how much you’ll owe without deferring your gains. We don't think 1031 exchange investing should be so difficult. Holding period requirements do not have a clear answer. /President, Reverse 1031 CORP. §1. Fernandez, Kiplinger Consumer News Service (TNS) In the context of a 1031 exchange, “boot” refers to the portion of a transaction that doesn’t meet the tax-free. For example, at an income tax rate of 25%, you would owe $9,090. To that end, you need to determine whether your property qualifies for 1031 treatment. 1031 Exchange Examples. Give the folks at Equity Advantage a call, 503-635-1031, to get started! In recessionary times seller finance gets more common. What is a 1031 exchange? A 1031 exchange, named after section 1031 of the U. Maximize your gain. Post-1031 exchanges the tax code states that you must split depreciation into two separate schedules as the preferred method. Learn the rules, rates, and benefits of 1031 exchanges, and see examples of how to use them for different scenarios. Tax. This is also Cash Boot. The Exchange Property Must be of Equal or Greater Value.