There are many essential rules to keep in mind during the 1031 exchange process. One of the most important, and often overlooked, is that it’s important to avoid receiving “boot” during the 1031 exchange process. In this article, we are going to explain why it’s essential to avoid boot at all costs in a 1031 exchange of real estate.
Avoid Boot at All Costs
There are a variety of things that can constitute boot in a 1031 exchange, but the most notable is the cash proceeds from the sale of your relinquished property. You want to avoid constructively receiving these proceeds at all costs. Receiving any cash boot goes against the whole idea of a 1031 exchange. You’re not supposed to receive any funds from the sale of your property, but rather move those funds into a replacement property.
Ideally you will have a qualified intermediary hold these funds for your during the 1031 exchange period and then reinvest them into your replacement property on your behalf – thus insulating you from receiving any boot and jeopardizing your exchange.
Begin the Like-Kind Exchange Process
Begin your like-kind exchange process now by contacting the skilled intermediaries at CPEC1031, LLC. With over two decades in the industry, we are one of the most experienced 1031 exchange companies in the state of Minnesota. Our qualified intermediaries assist taxpayers and investors of all types with their 1031 exchanges of real property. Whether this is your first time dipping a toe into the 1031 exchange waters, or you’re a seasoned veteran of like-kind exchanges, we can help you through all the details of the process. Contact us today to set up a time to discuss your exchange.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
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