In a 1031 real estate exchange, a tax liability arises if the person exchanging receives:

Question

Quizplus · Accepted Answer

In a 1031 real estate exchange, a tax liability arises if the person exchanging receives boot. Boot refers to any property or cash received that is not like-kind to the property being exchanged. It can include money or other property that may be given along with the like-kind property being exchanged. If boot is received, it is subject to capital gains tax, and the amount of tax liability will depend on the value of the boot received. Therefore, the individual should be careful during the exchange to avoid receiving boot, as it could result in a significant tax liability.

In a 1031 Real Estate Exchange, a Tax Liability Arises