Can i Recasting mortgage on 1031?

[Bernadette Andrews]

My husband and I are preparing to do a 1031 for the first time. We're planning to sell a home in VA and purchase the replacement in DC. We are financing and plan to put down 20%, or hopefully more. Since the replacement property is much higher and we'd like to reduce the principal, is it possible to recast (lower principal) using a lump sum amount from an inheritance I'm expecting within less than a year of completing the exchange? Thank you for some expert advice.

[Dave Foster]

@Bernadette Andrews, If you want to defer all tax on your 1031 you simply must purchase at least as much as your net sale.  And use all of the proceeds in the purchase.  Since you're buying something much more expensive that checks the first box.  So as long as you use all of the 1031 proceeds in the purchase you can add as much as you want on top of that so you borrow less.

There is no requirement that you have to have the same debt in your new property.