Don't Get the "Boot"!

The term “boot” is not used in the Internal Revenue Code or the Regulations but, is commonly used in discussing the tax consequences of a 1031 Exchange. Boot is property received in an exchange but not “like-kind”. Receiving boot does not disqualify the exchange but should be avoided in order for the exchange to be tax free. An exchanger who receives boot in an exchange transaction generally recognizes a gain to the value of cash received or unutilized debt.

Here is where Advantage Wealth Solutions comes in to the conversation:

When a primary goal of exchanging is tax deferral, the objective is to place every possible dollar into new property. If your relinquished property is sold for a price greater than the price of the replacement property, the difference is considered boot and will become taxable—unless the investor finds a way to use it. Searching for another property could be challenging due to inventory and the 45-day identification timeline. Additionally, an investor may find themself with a remaining balance from your sale after having re-invested the bulk of the profits from the sale. Lesser amounts might not be enough to acquire an attractive investment property without financing or further cash investment.

A Delaware Statutory Trust (DST) can be used to remove the boot.

A DST lets the investor choose the exact amount they wish to invest, down to the penny. Minimum investments are often $100,000 or less, allowing investors to remove the boot. Along with deferring all taxes from the sale, the money is Invested in professionally managed income producing property without the obligation of active property ownership.

Keeping all of your money working is possible with a Delaware Statutory Trust. Contact Advantage Wealth Solutions today to discuss how a DST can work for you.

PO Box 1031, Windham, NH 03087

24 Mitchell Pond Rd, Windham, NH 03087

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The content is developed from sources believed to be providing accurate information.  The information in this material is not intended as tax or legal advice.  Please consult legal or tax professionals for specific information regarding your individual situation.


This is neither an offer to sell nor solicitation of an offer to buy any securities. Offering facts and terms are controlled by a sponsor’s final Private Placement Memorandum (or prospectus). All investments and tax strategies have risks, including the possible loss of principal in many cases. Always review the offering document for a more thorough discussion of risks, expenses, and limitations. Certain investments discussed on this site are illiquid  and  generally cannot be sold readily on the open market. If you need to sell an asset to raise money quickly, you may not be able to do so.  Other investments are only available to accredited investors; the Security and Exchange Commission defines an accredited investor as an individual with either $1 million in net worth (all assets, excluding primary residence, less all liabilities) or net income for the last two years of $200,000 or greater ($300,000 if married) with a reasonable expectation of such earnings in the current year.

Past performance and/or forward statements are never an assurance of future results. Advisory Group Equity Services, ltd., its affiliated companies, and its representatives do not give tax, legal or accounting advice; nothing herein should be construed as such.

Securities Offered Through: Advisory Group Equity Services, Ltd., Member FINRA/SIPC/MSRB 

Advisory services offered by Trust Advisory Group, Ltd., a Registered Investment Advisor, 444 Washington St., Suite 407, Woburn, MA 01801  781.933.6100 

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