Discussion:1031 - Is sales commission rebate a boot?
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Discussion Forum Index --> Tax Questions --> 1031 - Is sales commission rebate a boot?
| 17 October 2007 | |
| In my recent 1031 exchange, i got 532k (529k from property sold, and 3k interest from the 529k), then bought the replacement property for 640k. During the process, my real estate agent charged me 5% commission but rebate me 5k. The problem is that they gave me the 5K after escrow is closed. Now that the 1031 company told me that it is a boot, subject the tax withhoilding and I have to wait till the end of the 180 days to received the money. Even more confusing, they said had I included the 5k in the escrow, evrything will be okay.
My thinking is that, the "boot" is the cash one received from the sales, the extra money not used towards the purchase. If all my 532k went into purchase, why is the money from a third party considered a "boot", the agent is not part of the property purchase deal, they only provided the service to me, and has nothing to do with the sales or the. Worst yet, why would it be okay if it was handled within the escrow? Thanks again. Vincent | |
| 18 October 2007 | |
| If you received cash, then it's taxable boot.You can't touch the money in a 1031 exchange. All cash should have gone through the 1031 company. | |
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