--- title: "Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense" description: Learn more about how a partial 1031 Exchange works and what your options are. image: https://blog.fgg1031.com/hubfs/Partial%201031%20Exchange.png --- [info@firstguardiangroup.com](mailto:) [(866)398-1031](tel:(866)398-1031) [![fgg](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/fgg.png)](https://brokercheck.finra.org/individual/summary/6470002) [![fgg-871923](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/fgg-871923.png)](https://www.bbb.org/us/ca/san-jose/profile/commercial-real-estate/first-guardian-group-1216-887513) [![logo](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/logo.png?width=175&height=56&name=logo.png "logo")](http://fgg1031.com) - [Home](https://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) - [Resource Center](https://fgg1031.com/resource-center/) - [Glossary](https://fgg1031.com/glossary/) - [Accommodators](https://fgg1031.com/accommodators/) - [FAQ](https://fgg1031.com/faqs/) - [Tax eBook](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook) - [Real Estate eBook](https://pages.fgg1031.com/real-estate-investing-in-the-new-era2) - [QI eBook](https://pages.fgg1031.com/resources/qualifiedintermediary/ebook) - [Tax Calculator](https://fgg1031.com/tax-calculator/) - [Newsroom](https://fgg1031.com/newsroom/) - [Blog](https://blog.fgg1031.com/blog) - [Events](https://fgg1031.com/events/) - [Contact Us](https://fgg1031.com/contact/) ![search-interface-symbol](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/search-interface-symbol.png) ![loader](https://f.hubspotusercontent-eu1.net/hubfs/24949188/Business%20and%20Finance/global/22.gif) ![close](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/close.png) From Pages From Blog Pages Load More Load More **Sorry, we couldn't find a match for  "".** Check your spelling or try a related search term. [![Register](https://no-cache.hubspot.com/cta/default/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664.png)](https://cta-redirect.hubspot.com/cta/redirect/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664) ![blog-template-banner](https://blog.fgg1031.com/hs-fs/hubfs/Blog%20Banner/blog-template-banner.png?width=1920&name=blog-template-banner.png "blog-template-banner") # Blog ### Subscribe to Our Blog ### Subscribe to Email Updates ## Featured Post   [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) ## [Senior Housing, Self-Storage, and Data Centers: Three Real Estate Asset Classes Many Investors Overlook](https://blog.fgg1031.com/blog/senior-housing-self-storage-and-data-centers) Many real estate investors operate within a fairly predictable range of asset classes — single-family rentals, apartments, perhaps some commercial expos\[...\] [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [DST](https://blog.fgg1031.com/blog/topic/dst) [Read More](https://blog.fgg1031.com/blog/senior-housing-self-storage-and-data-centers) ## Recent Posts [1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) # Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense By [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) A partial 1031 exchange allows real estate investors to defer taxes on a portion of their sale proceeds while accessing the remainder as cash or reducing debt obligations. Unlike a full 1031 exchange -where 100% of the proceeds are reinvested into replacement property of equal or greater value- a partial exchange lets investors meet short-term financial needs without abandoning the long-term benefits of tax deferral entirely. The portion not reinvested is called "boot," and only that portion becomes taxable. Many investors assume a 1031 exchange is all or nothing. It is not. Understanding how partial exchanges work and how they compare to full exchanges can open up planning options that are otherwise overlooked. #### **What Is the Difference Between a Full and Partial 1031 Exchange?** A 1031 exchange, named after Section 1031 of the Internal Revenue Code, allows investors to defer capital gains and depreciation recapture taxes when selling an investment property by reinvesting the proceeds into like-kind replacement property. When executed correctly, a full exchange defers 100% of the tax liability. A partial exchange occurs when one or more of the reinvestment requirements is not fully met- and while some tax becomes due, the remainder of the transaction may still qualify for deferral. The distinction comes down to three rules. For full deferral, the replacement property must be equal to or greater in value than the relinquished property. All net sale proceeds must be reinvested. And any mortgage paid off during the sale must be replaced with equal or greater debt on the new property, or offset with additional cash from outside the exchange. When any of these conditions fall short, the difference creates taxable boot. It is important to understand that receiving boot does not invalidate the exchange. The exchanger simply ends up with a "partially tax deferred exchange" rather than a "fully tax deferred exchange." Taxes apply only to the boot received, up to the amount of the total realized gain. Everything else remains deferred. ![Screenshot 2026-06-23 at 10.38.30 AM](https://blog.fgg1031.com/hs-fs/hubfs/Screenshot%202026-06-23%20at%2010.38.30%20AM.png?width=578&height=216&name=Screenshot%202026-06-23%20at%2010.38.30%20AM.png) **Key Point: A partial exchange preserves meaningful tax deferral even when full reinvestment is not possible or not desired.** #### **What Is "Boot" in a 1031 Exchange?** Boot is any non-like-kind property received during a 1031 exchange. In practice, boot most commonly appears as cash kept from the sale proceeds, debt that is reduced without being replaced, or property that does not qualify as like-kind. Receiving boot does not kill the exchange- it simply creates a taxable event on that specific portion. Boot is taxed as capital gains income and may also trigger depreciation recapture, state capital gains tax, and the Net Investment Income Tax (NIIT) depending on the investor's situation. The taxable amount is limited to the lesser of the boot received or the total realized gain. If an investor's realized gain is smaller than the boot received, taxes are capped at the gain, not the full boot amount. Careful planning with a Qualified Intermediary (QI) and tax advisor before closing is essential. Boot can sometimes be created unintentionally. For example, when closing costs are allocated incorrectly or when the investor does not recognize that a reduction in debt creates the same tax consequence as taking cash. **Key Point: Boot is taxed only up to the amount of the realized gain, and understanding what triggers it is the key to planning a partial exchange effectively.** #### **What Are the Most Common Causes of a Partial Exchange?** **Taking Cash at Closing** An investor may choose to retain a portion of the sale proceeds rather than reinvesting everything into the replacement property. That retained cash becomes taxable boot immediately. The rest of the proceeds can still move through the exchange and qualify for deferral. Example: An investor sells a rental property for $1,000,000 and wants to keep $150,000 for personal use. The $150,000 is taxable boot. The remaining $850,000 can still be used to complete a 1031 exchange into qualifying replacement property. **Buying Down in Value** If the replacement property costs less than the relinquished property's sale price, the difference is treated as boot. The investor does not have to match the full sale price, but the gap between the two values will be taxable. Example: An investor sells for $1,000,000 and acquires replacement property for $800,000. The $200,000 difference is taxable boot, subject to capital gains and potential depreciation recapture. **Not Replacing the Debt** This one catches investors off guard. If the relinquished property carried a $400,000 mortgage and the replacement property carries no mortgage, the $400,000 in relieved debt is treated as boot — even if the investor did not receive any cash at closing. To avoid this, the investor must either take on equivalent debt on the new property or contribute additional cash from outside the exchange to offset the debt relief. Example: An investor sells a property for $900,000 with a $350,000 mortgage and buys a $900,000 replacement property with no financing. The $350,000 in unresolved debt creates taxable boot unless compensated with cash from outside the exchange. **Key Point: Debt relief is treated identically to cash boot — investors must account for it or face an unintended tax consequence.** #### **How Are Taxes Calculated on a Partial Exchange?** Taxes in a partial exchange apply only to the boot received, not to the total transaction. The taxable boot may be subject to: *Federal capital gains taxes (0%, 15%, or 20% depending on income)* *Depreciation recapture tax (capped at 25% for real property)* *State capital gains taxes, where applicable* *Net Investment Income Tax of 3.8%, if applicable* To illustrate the math, consider the following example. An investor purchased a rental property 10 years ago for $300,000, claimed $100,000 in depreciation deductions over time, and recently sold it for $500,000. The adjusted basis is calculated as: $300,000 (purchase price) minus $100,000 (depreciation claimed) = $200,000 adjusted basis. The total realized gain is: $500,000 (sale price) minus $200,000 (adjusted basis) = $300,000. If the investor completes a full 1031 exchange, the entire $300,000 gain is deferred. If the investor retains $80,000 in cash boot, only that $80,000 is taxable- at applicable rates -while the remaining gain is still deferred through the exchange. **Key Point: Running the numbers with your tax advisor before closing is not optional. Knowing your adjusted basis determines exactly how much of a partial exchange will cost you.** #### **When Might a Partial Exchange Actually Make Sense?** The right answer depends on the investor's personal situation, and there is no single rule that fits everyone. A partial exchange might be the right move in a number of specific circumstances. Consider it when: *You need liquidity for a significant personal expense (medical costs, education, estate planning)* *You want to reduce leverage without triggering a full tax event* *You are unable to locate replacement property that matches the full value of your relinquished property* *You have tax loss carryforwards or other deductions that could offset the boot tax liability* *You are moving toward a simpler portfolio and want to access equity built over many years* It is also worth considering that holding appreciated equity in real estate indefinitely is not always the most rational financial decision. There are cases where accessing some of that equity -paying the tax, and deploying the capital elsewhere- produces better outcomes than deferring everything. That calculation is specific to each investor and should be worked through with a CPA. On the other hand, if too much cash is retained or significant debt is left unreplaced, the taxable portion of the transaction can outweigh the benefit of completing the exchange at all. Before proceeding, investors should compare the net after-tax position in both scenarios. **Key Point: A partial exchange may be worth pursuing when the remaining deferred gain is substantial enough to justify the structure — and when the boot serves a clear financial purpose.** #### **What Are the Strategies to Avoid Unintended Boot?** For investors whose goal is full deferral, there are practical ways to avoid triggering boot inadvertently: *Do not take cash at closing; if you need liquidity, consider a cash-out refinance on the replacement property after the exchange closes as a separate transaction* *Offset equity reduction by contributing additional cash from outside the exchange to meet the debt replacement requirement* *Consider acquiring a fractional interest in additional replacement property — such as a Delaware Statutory Trust (DST) — to make up any value gap when suitable single-asset replacement properties are not available* *Review your overall tax profile for the year before closing; carryforward losses or other deductions may reduce the actual cost of accepting some boot* DSTs, in particular, are a useful tool here. Because they allow investors to acquire fractional interests in institutional-quality properties with relatively low minimum investments, they can help an exchanger "top off" a partial exchange to reach full value replacement when a single whole property does not match the numbers exactly. **Key Point: Planning before closing — not after — is the only reliable way to avoid creating unintended boot and manage the tax outcome of your exchange.** #### Key Takeaways A partial 1031 exchange allows investors to defer taxes on a portion of sale proceeds while accessing the rest as cash or reducing debt Boot is the taxable portion of a partial exchange- it may include cash received, debt not replaced, or a trade-down in value Receiving boot does not disqualify the exchange; only the boot amount is subject to tax, capped at the realized gain The three rules for full deferral are: replace equal or greater value, reinvest all proceeds, and replace all debt or offset with cash DSTs and other fractional ownership structures can help investors bridge a value gap and achieve full deferral when whole properties fall short Always consult a tax advisor and Qualified Intermediary before closing to understand the full financial impact of your exchange structure For more information, feel free to reach out to our office for a consultation. You can also download our eBook [HERE](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook).  #### **FAQ** **Q1: Is a 1031 exchange all or nothing?** A1: No. Investors can complete a partial 1031 exchange and still defer taxes on the portion of proceeds that are reinvested into qualifying replacement property. Only the untaxed “boot"-cash retained, debt reduced, or trade-down in value -is subject to capital gains and depreciation recapture taxes. The rest of the transaction continues to qualify for deferral under Section 1031 of the Internal Revenue Code. **Q2: What exactly is taxable in a partial 1031 exchange?** A2: The taxable portion is the boot received, which may include cash kept at closing, the value of debt relieved without replacement, or the shortfall when replacement property costs less than the relinquished property. This boot may be subject to federal capital gains tax, depreciation recapture tax (up to 25%), state capital gains taxes where applicable, and the 3.8% Net Investment Income Tax depending on the investor's income. The taxable amount is limited to the lesser of the boot received or the total realized gain. **Q3: Does taking cash at closing disqualify a 1031 exchange?** A3: No. Taking cash at closing converts that portion of the transaction into taxable boot, but the rest of the exchange can still qualify for deferral. Investors who need liquidity but also want to preserve some tax deferral should work with a Qualified Intermediary before closing to understand exactly how much they can retain and what the resulting tax liability will be. **Q4: How does debt affect a partial 1031 exchange?** A4: Debt relief is treated the same as cash boot. If an investor sells a property with a $400,000 mortgage and acquires replacement property with no mortgage — without contributing additional cash to offset the difference- that $400,000 becomes taxable boot. To avoid this, investors must either take on equivalent debt on the replacement property or inject additional cash from outside the exchange equal to the debt reduced. **Q5: When should an investor consider a partial exchange over a full exchange?** A5: A partial exchange may make sense when the investor has a legitimate need for liquidity, wants to reduce leverage, or cannot locate replacement property that matches the full value of what was sold. It may also be appropriate when the investor has carryforward tax losses that can offset the boot liability, or when the cost of accessing equity is outweighed by the personal or financial benefit of doing so. Investors should model both scenarios with their CPA before deciding. [![](https://no-cache.hubspot.com/cta/default/5468919/interactive-183027517748.png)](https://blog.fgg1031.com/hs/cta/wi/redirect?encryptedPayload=AVxigLJaC2ySJvYKkGvOKCjqJDwutoIKUx%2Bo7YNSxrmT%2FsPrybpRrYvPskBarljZqFZa2mwrMJR%2FbTKTmWn3iuLYdEYy%2BIuT1tKfE27z3wsZ%2B5hzB7DzI0jPDiImKowl90WFSEB1RaapZsWXdv%2F8L1TY8gPFTruSr9kTSA1oChS%2BLMNVd3%2BPuEfGmWvQRu4A53VxMVpmDcU3zLYTBaeYvPX3ttfEFPX7Bmzq4RTF%2BULAaH8D&webInteractiveContentId=183027517748&portalId=5468919) ### [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Paul M. Getty is one of the most experienced 1031 exchange specialists in the United States, with a career in real estate that spans over 35 years and more than $5 billion in commercial transactions across every major asset class. His work covers single-family rentals, apartments, retail, office, multifamily, and student and senior housing, giving him a practical understanding of how different property types perform across market cycles and how investors can move between them using tax-deferred exchange strategies. As President and CEO of FGG1031 | First Guardian Group, Paul advises investors through the full 1031 exchange process, from identifying qualifying replacement properties to structuring acquisitions through Delaware Statutory Trusts (DSTs) and wholly owned real estate. His guidance covers both the compliance requirements of a valid exchange and the investment decisions that determine long-term portfolio outcomes – a combination that is difficult to find in a single advisor. Paul holds a California and Texas real estate broker license and carries Series 22, 62, 63, and 82 securities licenses as a registered representative with Emerson Equity LLC, member FINRA /SIPC. He has represented buyers and sellers across complex commercial transactions, sourced and structured debt and equity, and worked alongside nationally recognized firms including Marcus Millichap, CBRE, JP Morgan, and Morgan Stanley. Before founding FGG1031, he co-founded Venture Navigation, a boutique investment banking firm whose M&A and IPO activity generated over $700 million in investor returns. Paul holds an MBA in Finance from the University of Michigan and a bachelor’s degree in chemistry from Wayne State University. He has also completed coursework in artificial intelligence at Stanford University. He is the author of four books on real estate investing and tax deferral strategy, including Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST) and Real Estate Investing in the New Era, both available on Amazon. A frequent speaker on 1031 exchanges, DST investing, and real estate tax strategy, Paul Getty is a recognized voice for investors and advisors seeking guidance on capital preservation through tax-deferred real estate investment. ## Your Comments : This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. - Latest Posts - Popular Posts [Senior Housing, Self-Storage, and Data Centers: Three Real Estate Asset Classes Many Investors Overlook](https://blog.fgg1031.com/blog/senior-housing-self-storage-and-data-centers) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) [Why Everything You Knew About Real Estate Investing Changed in 2008 - And Why Many Investors Still Haven't Caught Up](https://blog.fgg1031.com/blog/real-estate-investing-changed) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [ DST](https://blog.fgg1031.com/blog/topic/dst) [Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense](https://blog.fgg1031.com/blog/partial-1031-exchange-how-it-works) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) ### Categories - 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[Investing in Senior Housing October 20, 2022](https://blog.fgg1031.com/blog/investing-in-senior-housing) - [A Closer Look at the 7 Deadly Sins October 20, 2022](https://blog.fgg1031.com/blog/a-closer-look-at-the-seven-deadly-sins) - [What is a Springing LLC? October 20, 2022](https://blog.fgg1031.com/blog/what-is-a-springing-llc) ## Useful Links - Home - About Us - Blogs - Testimonials from Past Customers - Resource Center - Current Offerings Disclaimer: There is no guarantee that any strategy will be successful or achieve investment objectives. All real estate investments have the potential to lose value during the life of the investments. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum. This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, FGG1031, First Guardian Group, LightPath Capital, Inc., and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal. Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect.  The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. All financed real estate investments have a potential for foreclosure. Delaware Statutory Trust (DST) investments are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits. IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. Securities offered through registered representatives of [LightPath Capital, Inc.](http://www.lightpathcapital.com/) Member [FINRA](http://www.finra.org/) / [SIPC](https://www.sipc.org/). FGG1031, First Guardian Group, and LightPath Capital, Inc. are separate entities. Copyright 2022, All Rights Reserved, FGG1031 [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:) [![Bitmap](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/Bitmap.png)](https://brokercheck.finra.org/individual/summary/6470002) ## Recent Blogs - [Understanding the Difference Between Inheritance and Estate Tax August 3, 2023](https://blog.fgg1031.com/blog/understanding-the-difference-between-inheritance-and-estate-tax) - [Public or Private Real Estate? Your Investment Portfolio May Need Both July 27, 2023](https://blog.fgg1031.com/blog/public-or-private-real-estate-your-investment-portfolio-may-need-both) - [How to Use 1031 Exchange Funds to Improve Your Replacement Property July 20, 2023](https://blog.fgg1031.com/blog/how-to-use-1031-exchange-finds-to-improve-your-replacement-property) ## Useful Links - [Home](http://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Blogs](https://blog.fgg1031.com/blog) - Testimonials from Past Customers - [Resource Center](https://fgg1031.com/resource-center/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) FGG1031 | First Guardian Group and Emerson Equity LLC do not provide legal or tax advice. Securities offered through [Emerson Equity LLC](http://www.emersonequity.com/) Member [FINRA/SIPC](http://finra.org/) and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein. 1031 Risk Disclosure: - There is no guarantee that any strategy will be successful or achieve investment objectives; - Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; - Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; - Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments; - Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; - Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward looking statements are never an assurance of future results. Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read and understand all of the risks associated with buying private placement securities. Investments are not guaranteed or [FDIC](http://fdic.org/) insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur. **Risk Disclosure:** Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by FGG1031 | First Guardian Group, Emerson Equity LLC, or any affiliate, or partner thereof. FGG1031 | First Guardian Group does not warrant the accuracy or completeness of the information contained herein. Copyright 2026, All Rights Reserved, FGG1031