Solving for Boot & Eliminating Taxable Exposure
When David sold the building where he ran his business, the value of nearby homes he wanted to purchase was lower than the value of the building. That meant he would end up with taxable boot—exposing part of his sale to immediate capital gains taxes.
Client:
David Morgan
Website:
N/A
Date:
March 26, 2019
Category:
Real Estate
01. Сhallenge
Investing Boot From the Sale of an Owner-Occupied Building
Client: David Morgan
Profile: Sold his long-time office building used for his business
When David sold the building where he ran his business, the value of nearby homes he wanted to purchase was lower than the value of the building. That meant he would end up with taxable boot—exposing part of his sale to immediate capital gains taxes.
02. Solution
We allocated the remaining proceeds (the portion that would have become boot) into DSTs so he could:
- Defer 100% of the capital gains taxes
- Reduce management responsibilities
- Keep his exchange compliant
- Still purchase the investment property he wanted
03. Outcome
- No boot
- No taxes due
- Clean, compliant exchange
- Passive DST income supplementing his retirement
“I didn’t realize there was a solution for the leftover funds. This saved me tens of thousands in taxes.”
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