{
  "url": "sellingrealestateflorida.com/faq/what-happens-if-the-replacement-property-in-a-1031-exchange-has-a-lower-value-th",
  "name": "What happens if the replacement property in a 1031 exchange has a lower value than the relinquished property?",
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    {
      "name": "What happens if the replacement property in a 1031 exchange has a lower value than the relinquished property?",
      "@type": "Question",
      "acceptedAnswer": {
        "text": "If the replacement property in a 1031 exchange has a lower value than the relinquished property, you will receive 'boot' — non-like-kind property or cash. This 'boot' is taxable up to the amount of the gain realized on the original sale. To achieve a fully tax-deferred exchange, the investor must reinvest all the net proceeds from the sale of the relinquished property and acquire a replacement property of equal or greater value and equity. Receiving boot, such as excess cash, will trigger partial capital gains tax liability, even if the primary exchange is valid.",
        "@type": "Answer",
        "description": "If the replacement property has lower value, the difference, known as 'boot,' becomes taxable up to the original gain."
      }
    }
  ],
  "description": "If the replacement property has lower value, the difference, known as 'boot,' becomes taxable up to the original gain."
}