Mortgage on relinquished property

[Doniel Winter]

I completed a 1031 exchange in October 2024. Does the private mortgage on the relinquished property I sold need to be recorded on the replacement property I bought, or can it be recorded on another property I own as a second mortgage?

[Ghassan Jabali]

Hello Doniel,
Generally, the mortgage from the relinquished property may have to be placed on the replacement property to ensure there are no issues with discharge of debt with the transactions or the 1031 exchange itself. I normally recommend working with a 1031 Exchange Intermediary to make sure you are doing everything correctly and do not run afoul of any of the IRS's rules or regulations.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication