Refi, Cash Out To Pay Repairs Then 1031X - Is It Taxable?
My current loan on rental is 200K. If I refi to payoff current loan and take an extra 20K to spend on rental property repairs / improvements, would the 20K be considered boot if I do a1031exchange 6months from now?
Because your earlier question said that you had charged your rehab/improvement cost to credit cards, then a refinance now in anticipation of a 1031 exchange does not change the situation you posed in your earlier question.
As Bill Exeter suggested, the IRS will use a step transaction process to see that your refinance is just a ruse to evade taxes on cash boot. Your six month delay between the refinance and the exchange may obscure your intent, but now that you have declared your intent in this public forum, I have to say that you will still be in constructive receipt of taxable boot.
Better to refinance your replacement property after the exchange has closed to get the cash you need to pay off your credit cards.