Cash-out refi, buy, sell then 1031?

[Jack Tucker]

This is probably a very basic question, but I have no shame when it comes to learning here in BP: I'm about to do a cash out refi on one property (#1) I own free and clear in order to use that cash as a down payment for a new property (#2).

If I can eventually sell property #1, am I able to 1031 the cap gains into the loan on the new loan for property #2? It's almost like a 1031 but it's like putting the cart before the horse in the typical sell-buy scheme of things.

Thanks in advance for your patience with my basic questions.

[Bill Exeter]

@Steven Hamilton II is right on the money. The most challenging part of a Reverse 1031 Exchange is the financing. Lenders are not excited about the Qualified Intermediary holding title to the property during the Reverse 1031 Exchange.