Posted by E.Eka on October 11, 2003 at 21:43:55:
I am a tax accounting analyst and Atlanta_Bob has it right. Basically, a section 1031 is known as like kind exchange. Initially it was geared towards exchanging like property without having to pay tax on that exchange.
You will only have to pay tax on boot or tax received. That usually is the case if you sell for a higher amount then the next property that you’re buying. So if you sell one home at $140K and the new property you invest in is $130K, you’ll be subject to tax on the difference of $10K.
There is a lot more to talk about, but I’m tired. Your best bet is to contact your CPA to determine the best way to handle the transaction.