Adams County Colorado 1031 Real Estate Property
What is a "BOOT"?
Boot is defined as
any "NON-LIKE-KIND" property received by the Exchanger in the exchange and it is
CASH BOOT--Cash Boot consists of any funds actually or
constructively received by the Exchanger. Receipt of funds may occur if the
proceeds from the sale of the relinquished property are not fully used to acquire the
replacement property, then the remaining proceeds are subject to being taxed. Cash
Boot may also be in the form of a promissory note that is received by the Exchanger.
Please contact us for more information on situations where the Exchanger will be helping
to finance the relinquished property.
Boot occurs when the Exchanger does not acquire debt that is equal to or greater than the
debt that was paid off, therefore, they were "RELIEVED" from a debt. If
the Exchanger does not acquire equal or greater debt on the replacement property, they are
considered to be "RELIEVED OF DEBT", which is perceived as taking a monetary
benefit out of the exchange. Therefore, the debt relief portion is taxable, unless
it is offset by adding equivalent cash to the transaction. There is more to it than just spending all the exchange equity!
In conclusion, an
Exchanger must buy replacement property of equal or greater value while spending the
"NET" (after costs) equity. It is absolutely acceptable to take cash out
of the exchange and pay taxes on that amount.
FOR ALL OF THE INFORMATION YOU WILL NEED,
2953 S. Peoria St.
Aurora, Co 80014
DIRECT TELEPHONE: 303-759-8500
Property Investments, 1031 Exchanges, Land
Development Services for YOU!
This material is designed only to
provide information concerning I.R.C. Section 1031 Tax-Deferred Exchanges. It is not
intended to provide or replace legal, accounting or other professional counsel.
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