1031 exchange on carriage house portion of primary residence

[Lucy Bennet]

Just looking for some answers I'm having trouble finding. I'm selling a rental property, capital gains will be about $130000. This property was purchased 4 years ago with a previous 1031 exchange. Basically about downpayment at closing table. I realize I must get advice from my CPA but he is out of town this week and just need some general advice as I'm on a time crunch.

Moving into primary residence with a carriage house (CH will be used only as a rental- I will never live there). The 1031 X company has told me I can use the $130,000 towards the carriage house portion of the purchase and first must contact my CPA to write up a document saying how the PP of the entire new property will be split up as primary and investment property and 1031 x portion will only go towards CH.

So far, so good. My lender has also told me that although they will not allow a 1031 ex to be used towards a purchase on a primary residence(as we all know those are the rules), he also told me that they will NOT see the 1031 X docs and after funds for closing have been verified, they will not care where the funds to close are coming from. (ie, they don't care if it is coming from a 1031 exchange company or from my own bank). I will have enough to cover the 20% down without using the 1031 x funds.

Here is where I can't seem to get any direction on: PP for new residence is $655,000 and down payment is 20% ($130000). If I go the route of the 1031 X, then at the closing table, will I need to send in the $130,000 from the 1031 Ex ONLY???? as it will count as my entire downpayment since the bank doesn't see where that money is coming from? OR do you think I will need to send in $130,000 from the 1031 X and then an additional $130,000 towards the primary residence downpayment?

It seems easy enough as I write it out, but no one is giving me a definite YES or NO and if I'm going to have to cough up an additional $130,000 in addition to the $130,000 1031 x then I need to know for sure before I set all this up. Can anyone help?