1031 Exchange into Multiple Properties

[Chris Combado]

Im considering selling a rental property and doing a 1031 into two separate properties. Both properties total costs will add up to the cost of the property I'm selling. The properties I'm looking at combined, require a downpayment of less than the profit I'll get from the sale of the house. My question is, is the extra money left after the down payments subject to capital gains tax? Or am I in the clear since I still meet the requirement of the costs of the properties equalling the cost of the house being sold? 

Thank you!

[Dave Foster]

Thanks for those kind shout outs @Alex Olson and @Bernard Joseph S..  You guys did all the heavy lifting.  @Chris Combado, You. have to do two things to defer all tax.  First you have to purchase at least as much as you sell.  And second, you must use all of your proceeds from your sale in the purchases.

For you this could actually work to your advantage as you're buying multiple replacements.  Rather than using two equal down payments, purchase one of the properties for cash (or as much cash as you can put in it and still have a down payment left for the second property).  Then use maximum leverage for the second property.  You'll cut some loan costs down if you can go from 2 to 1 loans.  But more importantly, you'll defer all the tax in the 1031 while concentrating equity so if you find another property later it will be a simple matter to access that equity with a refi of only one property.  As the guys said we act as a QI nationwide.  I'll reach out via pm to flesh this out further with you.