Our clients have many questions when it comes to exchanging property under section 1031. Some of the most common questions are on the topic of “cashing out.” In this article, we are going to talk about whether or not you can partially cash out in a 1031 exchange.
If you decide to “cash out” or receive boot at any point during your 1031 exchange, you will recognize gain and not be able to defer 100% of your proceeds. Depending on how much boot you receive, this will either result in a partial 1031 exchange, or a completely failed 1031 exchange.
If you find yourself in this situation, there are some options to help you recover, but it’s always best to come to the 1031 table fully prepared. Listen to your qualified intermediary at all times throughout the process so you don’t fall into any traps that will result in less than 100% tax deferral.
Stay Away from Your Proceeds
The best piece of advice we can give you is to stay away from your relinquished property proceeds at all times throughout the process. Allow your intermediary to handle this for you until it’s time to reinvest into your replacement property.
Qualified Intermediaries You Can Trust
At Commercial Partners Exchange Company, our trusted intermediaries have been facilitating exchanges of real property for more than twenty years. We can help you through every step of the like-kind exchange process by preparing your 1031 exchange documents, advising you on replacement property, and answering all of your questions. Give us a call today to learn more about our services and how we can help you defer taxes on the sale of real estate.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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