See how much taxable boot a partial reinvestment would create, and what it takes to defer the full gain.
Boot is any value you receive in an exchange that you do not reinvest — and it is taxable even inside a 1031 exchange. There are two kinds:
To eliminate boot, replace both your equity and your debt: reinvest all of your net equity and take on at least as much new debt as you paid off — or add equal cash to offset a smaller loan. Acquire replacement property of equal or greater value, and the full gain can be deferred.
Educational estimate only. This tool is for general illustration and is not tax, legal, or investment advice. It uses simplifying assumptions and the figures you enter, which may not reflect your situation or current law; depreciation recapture, net investment income tax, state taxes, and other items can change the result materially. Figures are illustrative and not guaranteed. Consult your own qualified tax and legal advisors before acting. Not an offer or solicitation. DST interests are sold only to accredited investors via private placement memorandum. Securities offered through Aurora Securities, Inc. (ASI), member FINRA/SIPC; Baker 1031 Investments is independent of ASI.
Reinvest all of your net equity and acquire replacement property of equal or greater value, replacing at least as much debt as you paid off (or offsetting lower debt by adding cash).
Yes. A reduction in your debt is treated as a benefit received. Unless offset by additional cash invested, it is taxable boot.
Yes. You can intentionally take boot if you want some liquidity; you simply pay tax on the boot and defer the rest of the gain.
