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Securities, such as stocks and bonds, do not qualify as Section 1031 like kind exchange assets. And, mutual funds simply hold stocks and bonds. So, if you sell the mutual funds, even if you then use proceeds to invest in real estate, you would pay tax on any gain you recognize on the sale of the mutual funds. Your gain would be the sale price less your basis in the mutual funds. Your basis in your mutual funds is your purchase price (which includes not only your original purchase price for your original shares, but also the purchase price for any additional shares you have acquired through re-investment). Mutual fund shares held 12 months or longer would qualify for long term capital gain treatment; mutual funds shares held less than 12 months would be short term capital gains.
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If you mean "down by $100,000" means that your sale price is $100,000 less than your basis, then you would recognized a capital loss. If the mutual funds are simply down from their high, then that would not necessarily be a loss. A capital loss can be deducted to the extent of your capital gains plus an additional $3,000 can be used to offset ordinary income. Any unused loss, can be carried over to subsequent taxable years until the capital loss is fully utilized.