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Good afternoon and thanks for using JUST ANSWER. If you are selling a commercial property that was held for investment for longer than one year, the cash proceeds will be taxed as capital gains tax, rather than ordinary income. Under IRS code section 1031, if the proceeds are reinvested in another property, and the code regulations for that type of transaction are strictly followed, then the capital gains tax is postponed, rather than eliminated. The capital gains tax is transferred to the sale of the replacement property. That property to can be sold under a 1031 exchange to third property. You can keep some of the proceeds from the first sale, and pay capital gains tax on that portion of the money received in the year of the sale.
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Any part of the sale proceeds that is used for purposes other than the purchase of the replacement property becomes taxable. Thus if you received $100k from the sale, and purchased a like kind property for $75,000 and keep $25k for other purposes, you would be taxed on the $25,000 in the year of the sale.