I haven't looked at the rules specifically for this situation, but I think the OP is correct.
Passive Losses offset Passive Income. I would THINK the taxable "boot" from 1031 exchange of a PASSIVE property would be considered as Passive Income. I don't see why it wouldn't be passive. Assuming that is the case, the Passive Losses would offset that Passive Income.
As others noted, if the carryover losses exceed your Passive Income, that amount can not be used until you have Passive Income or the property is sold in a fully taxable transaction.
