1031: Sold Turnkey home, purchasing unfurnished - may I use 1031 to furnish new STR ?

[Kasha Williamson]

My purchase is $25k under the net of the STR sale, would like to use that $25K to do some landscaping improvements (trees/fencing) and to furnish the STR. May I use that $25k difference to do so, and if so how does my QI distribute ?

Thank you.

[Jeff Copeland]

You can use it. But you'll most likely have to pay capital gains taxes on it if you do. 

Your QI will distribute it, and report it to the IRS, as "boot". The tax hit on $25k shouldn't be too excessive (and you may be able to offset it with other losses). 

Tagging 1031-Guru @Dave Foster to see if he has any other creative solutions for you.