Category
Tax Strategy
Tax mechanics around real estate exchanges: deferral, depreciation recapture, basis carryover, state clawback rules, boot avoidance, and the estate step-up.
- Boot avoidance: the math on equity, debt, and the 200% rule
Boot is the portion of exchange proceeds that triggers gain recognition. Managing equity and mortgage debt carefully, and applying the 200% identification rule correctly, is how investors stay fully deferred.
- Swap-til-you-drop: how the basis step-up works at death
Heirs inherit appreciated property at fair market value on the date of death, eliminating deferred gain entirely. Coordinating a lifetime exchange program with an estate plan is the structural play.
- California 1031: Clawback, Form 593, and the Mello-Roos question
California's Franchise Tax Board can follow a 1031 investor across state lines for years after the exchange closes. Understanding Form 593, the clawback statute, and Mello-Roos obligations is required reading before any California sale.
- No-state-tax 1031 markets: TX, FL, NV, WA mechanics
Four major 1031 destination states impose no personal income tax on capital gains from real estate sales. The mechanics differ by state, and out-of-state buyers face distinct considerations in each market.