Partial 1031 Exchange

[Jas Sarn]

I am looking for a 1031 exchange to sell one property in California / SF Bay Area to multiple properties in other states.

I bought the home for $200K. It is worth now $600K. I plan to invest the $400K of gains in potentially 2 homes in other states and generate more rent and also diversify out of CA (as my primary residence is also in CA)

Will my original $200K investment on the home that I am selling  (I plan to cash this for different uses) considered a Boot ? If yes, Why should it be ?

I am not making any capital gains from this transaction as I am investing ALL of the $400K in capital gains back in real estate through 1031

Thanks

[Dave Foster]

@Jas Sarn Yah, I don't disagree.  Unfortunately they make the rules.  What many of our clients will do who are in your debt free position is to complete a full 1031 exchange.  And then after the 1031 is complete do a refinance and pull the cash out.  That way they defer all tax in the 1031.  And get the cash which is tax free in a refinance.