Capital Gaines and Trying to Understand 1031 Exchange

[Lain McCanless]

Hey! We're about to close on our first rental flip. I've been doing some reading about the 1031 exchange but still have questions. Do we have to reinvest all of our profits in order to not get taxed or can we just reinvest enough for a downpayment and then use the rest of the profit towards a business vehicle, etc...? Thank you! 

[Dan Maciejewski]

There are some QIs on here that can definitely help you more, but:

Any of the boot (profit) you do not re-invest in a like-kind asset becomes taxable.

If you spend it on a business vehicle before it becomes profit, it's a business expense, AFAIK,  Ask your financial planner to be sure!