WHAT IS A PARTIALLY TAX-DEFERRED EXCHANGE?
Partially tax-deferred exchanges are transactions in which some portion of the realized gain is recognized and some is not (i.e., you will pay some of the taxes due upon sale, but not all). Examples include: 1. Exchanges which are a combination of a 1031 exchange and an installment sale, with the loan documents payable to the exchanger; 2. Exchanges involving replacement property which is comprised of business or investment property and personal property. You can be fully tax-deferred on these exchanges if you do a multi-asset exchange, covering both the real and personal property; 3. Exchanges where a portion of the gain is taken in cash or other “boot” property, and the balance of the gain is invested in qualifying replacement property.
