Tax-Deferred Thursdays....
Based on my earlier post on the ugly 1031 Exchange fraud in Las Vegas, I thought I would do a post each Thursday to 1031 Exchange basics.
This week will be some basic terms.
Boot - Any assets received from a 1031 Exchange that is not "like-kind." The most common types are "Cash Boot" and "Mortgage Boot." All Boot is taxable.
Cash Boot - Any cash an exchanger receives upon the closing of the relinquished property is considered Boot and can be taxable.
Constructive Receipt - The Exchanger having unrestricted control of the equity from property sold. Constructive Receipt will invalidate a 1031 exchange.
Qualified Intermediary - A third party that helps to facilitate the tax deferred exchange. Sometimes refers to as "facilitator," or "accommodator".
Relinquished Property - The property sold when making a tax deferred exchange.
Replacement Property - The property purchased when making a tax deferred exchange.
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