Can I Add Additional $ When Doing 1031 ?
Hello,
Purchase price $208k.
10 % down ( used HELOC ).
Optioned it to a tenant in 1 yr. for approx. $250k.
Want to do a 1031.
Understand the new property has to be equal to or greater than previous property.
Can I add additional $ to the down payment on the new property in order to lower my new mortgage ?
Appreciate your inputs as always !
As long as you reinvest all of the net proceeds from the sale of your relinquished property, you can always add your own money to the replacement property acquisition.
This assumes that your deal qualifies for 1031 treatment. It also sounds like you are engaged in a dealer activity which is not eligible to participate in a 1031 exchange.
NKIT2,
This is my first investment property. I was under the impression that if I held the property for a yr. or more, then it is viewed as an investment by the IRS & not a flip. Do you know of a place where the IRS definition of a dealer can be located ?
Thanks
Internal Revenue Code Section 453 defines a dealer disposition as "Any disposition of real property held primarily for resale to customers"The holding period is irrelevant here, only your intent to resell the property for profit rather than hold for the prduction of income or future appreciation.
The first question - yes, you can always add money to the acquisition of your replacement property.
Your INTENT is the bottom line.
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