1031 Tax-Free Exchange
1031 exchange: tax-deferred, not tax-free. Gain carried to replacement (reduced basis). Sell without exchange: gain recognized. Multiple exchanges: defer indefinitely. At death: stepped-up basis eliminates gain (IRC 1014). Boot (taxable): cash, mortgage reduction, or non-like-kind property. Avoid boot: reinvest all equity + replace all debt. Mistakes: miss 45-day, touch proceeds, inadequate ID, boot, and related-party QI.
Deferred, Not Free
- Gain carried to replacement
- Exchange indefinitely
- Death: stepped-up basis eliminates
Boot (Taxable)
- Cash, mortgage reduction
- Non-like-kind property
- Avoid: reinvest all + replace debt
Common Mistakes
- Miss 45-day deadline
- Touch proceeds directly
- Related-party QI
Related Terms
- Tax Deferred 1031 — Exchange basics
Barnes Walker Real Estate
Barnes Walker’s attorneys structure 1031 exchanges in Florida. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC