1031 exchange then sell to avoid taxes

[Ross Shively]

I have a property that I have had for 10 years. It has increased about 150k in value and I have captured depreciation on it for 8 years. If I pay capital gains on the 150k and the depreciation pay back it will take more of the profit than I want right now. Does anyone know if I can do a 1031 exchanged then after all has settled with escrow sell that property at value having never captured depreciation and not have to pay any taxes?  

[Dave Foster]

@Ross Shively, Like @Buddy Holmes said, the gain and depreciation follow you into the next property.  If you ever sell without doing a 1031 the tax will come due.  However, you can do a 1031 and then refinance afterward to pull cash out.

You can also add to your depreciable basis by purchasing more than you sold.  and of course you can use your proceeds to purchase multiple properties as replacements if you want to expand.

If your planning to keep investing then 1031 lets you use all of your equity.  If you're wanting cash then a 1031 followed by a refi is the answer.  And if the property you have now is a good one and can stress test a higher mortgage then just do a refi on it now.