Realized 1031 Glossary of Terms

Partial 1031 Exchange

Written by The Realized Team | Nov 10, 2015 6:00:00 AM

To the extent less than 100% of the proceeds of a relinquished property are reinvested, the difference will result in mortgage boot and/or cash boot. The boot is subject to depreciation recapture and capital gains tax while the amount reinvested is on a tax deferred basis.

As an example calculation, if the sale of an investment property generated $100,000 of net proceeds, but only $80,000 was reinvested, the $80,000 could be tax deferred while the $20,000 of retained proceeds would be considered boot and subject to capital gains and depreciation recapture taxes.