Using a 1031 Exchange for HML

[Michael Mignogno]

Hi Everyone, I have never used the 1031 exchange, but recently decided to place 2 of my rental for sale. Can I use the profits as a down payment for either a commercial loan or a HML? This is new territory to me so any info you have would be greatly appreciated!

TIA!

[Michael Mignogno]

Quote from @Dave Foster:

@Michael Mignogno, The IRS does not care what the source of your financing is.  As long as you purchase at least as much as your net sale.  And as long as you use all of the net proceeds from the sale in the purchases you can use any type of financing you want.  And you can allocate those proceeds any way you want.  So use them to buy one house with zero or little mortgage and another with maximum financing.  Nice to have that kind of flexibility.

 Thanks Dave, this is very helpful.   I will surely be in touch if I have any more questions