Is a 1031 Exchange Partial Cash Out Beneficial?

Partial Cash Out 1031 Exchange

With the current strength of the real estate market, many real estate investors face steep capital gains taxes when selling property. That makes 1031 exchanges very attractive as they allow a taxpayer to defer those capital gains taxes so long as you move all of your proceeds into a new property. But some taxpayers may want to pocket some of those net proceeds in addition to deferring their taxes. Is it possible to have the best of both worlds? In this article, we are going to talk about whether or not it’s beneficial to do a partial cash-out on your 1031 exchange.

Cash Boot

The short answer is, yes – it is possible to do a partial 1031 exchange and pocket some of the sales proceeds. But remember, any cash that you receive during the 1031 exchange process is considered boot and is subject to capital gains taxes. The amount of cash boot you receive and whether or not it will still be beneficial to conduct an exchange depends on your specific property and situation. It’s important to consult with your tax advisor before making a decision.

Real Estate Exchanges in MN

Real estate exchanges are great for individual taxpayers (because they allow you to defer capital gains taxes), as well as the economy as a whole. Any US taxpayer can avail themselves of the benefits of section 1031, so it’s always worth considering when you’re looking to sell real estate. With twenty years of experience, our team has the skills needed to accomplish the goals of your 1031 exchange. Contact our qualified intermediaries today to learn more about our services and to set up a time about your exchange.

  • 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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