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1031 Exch. Transfer To Mortgage Bal.

hunchie profile photo
  • Saturday, May 22, 2004 @ 05:09 PM EDT
  • 3 Comments

If i sold a property and the money was held in a 1031 exchange can partial of the money be used to pay off an existing mortgage on my personal residence?

Comments(3)

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    InActive_Account21st May, 2004

    No, that would be considered taking constructive receipt of the proceeds, which would disallow the tax deferred exchange.

  • no photo
    hunchie21st May, 2004

    Is there a limited quantity of properties than can be bought with one 1031 exch.
    Ex: I sold a 400K prop. and would like to buy 5 X 80K prop. Is this possible?

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    moveitnow22nd May, 2004

    Yes, you can buy multiple properties, and they don't have to be the same type as what you sold. For example, you sell your $400K SFR and buy 2 $80K rentals, and a $240K quad (or commercial building or land or other real property).

    The restrictions (as I understand them) are:
    - that you have to exchange an equal amount of value ($400K) or more
    - and you must take on at least as much debt. So, if you have $200K left on the existing mortgage, you must have at least $200K of mortgage(s) on whatever you buy.
    - you have to identify what you want to buy within 45 days and close within 180 days.
    - You can't buy a family member or friend's house, or your own.
    - You can buy first, then sell, but it is a lot more complicated.

    There are lots of good websites that explain it all. Your 1031 intermediary will guide you through all of it.

    Peter

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