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.” |
