The Real Estate Encyclopedia
What Are Exchanges And How Do They Work?
Category - Home Buying Questions - Insurances & Taxes FAQ's

Under Internal Revenue Code Section 1031, if an investor exchanges property instead of selling it, payment of the capital gain may be deferred.  The property must be of “like kind,” meaning real estate is exchanged for real estate of equal value. 

 

Sometimes, additional money or personal property is given to make up the difference between the values of the exchanged property.  This money or personal property is known as “boot,” and capital gains must be paid immediately on the “boot.” 

 
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Home Ownership Questions - Home Insurance FAQ's
Home Selling Questions - General Home Selling FAQ's
Real Estate Information Sources - General Real Estate Information
Home Buying Questions - Insurances & Taxes FAQ's
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