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Daily Archives: October 26, 2017

Beware This Unexpected Source of Boot In A 1031 Exchange

Beware This Unexpected Source of Boot In A 1031 Exchange

When it comes to 1031 exchanges, the key to full tax-deferral of capital gains is avoiding any real or constructive receipt of sale proceeds or other income related to the overall transactions. It sounds easy enough in theory, but many investors unwittingly violate this rule – and end up with taxable funds – when it comes to prepaid rent and security deposits on relinquished rental properties. In a typical, non-1031 exchange closing, any prepaid rents or security deposits held by the seller are credited to the buyer at closing. It is a clean way to do the transfer of these assets related to the sold real estate. However, the rules […]