1031 to pay back HELOC?

[Brittany R.]

If a HELOC is used for a down payment on a replacement investment property, can it be paid back (within the 180 days) once the old property has been "relinquished"?

If this doesn't make sense I can try to clarify, we are learning as we go!

[Dave Foster]

@Brittany R., Debt doesn't matter.  As long as you purchase at least as much as your net sale and use all of the proceeds from the sale in your purchase you will defer all tax in the 1031. What you do with the debt after that is up to you.  If you're asking can you use your own proceeds (the heloc) to purchase the replacement property and then after that sell your old property and use the proceeds from the sale to pay down the heloc - that's a hard no without a complex and expensive Reverse exchange.!  The 1031 order must be that you close your sale before you take title to the new property.