Do I have to reinvest all the proceeds in a 1031 exchange?
To defer 100% of your tax, yes — you generally need to reinvest all of your net sale proceeds and acquire property of equal or greater value, with equal or greater debt. You can still do a partial exchange and keep some cash, but any amount you don’t reinvest is taxable boot. It’s deferral on what you roll forward, tax on what you keep.
Two rules of thumb for full deferral: buy up (equal or greater value) and don’t pull cash out. Trading down in value or in mortgage creates boot.
Partial exchanges are legitimate and common when you need some liquidity — you just pay tax on the portion you take. See what taxes a 1031 defers and estimate the numbers on the calculators.
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General education — not tax or legal advice. This explains how §1031 exchanges work in general terms and uses simplified assumptions. Rules and tax rates change and your situation is specific. Talk to a qualified CPA or tax attorney before you rely on any of it. See our full terms & legal notice.