Purchasing a 1031 Replacement Property with seller financing

[Jason Mak]

There's a plethora of articles about how to use seller financing to sell a relinquished property, but I'm selling a property and would like to acquire a replacement property  with seller financing.  

In this case, would the seller financing be counted as mortgage boot?  Essentially, would the seller financing be considered a regular debt to count towards the exchange amount?

hoping @Bill Exeter or any pros can chime in here

Many thanks in advance for your help

[Dave Foster]

@Joe Bourguignon, There's a simpler way of looking at it.  If you do two things you will not have a taxable event.

1. Purchase at least as much as your net sale (contract minus closing costs)

2. Use all of your proceeds in the next purchase or purchases (the net sale minus mortgage pay off)

You specifically do not have to replace a mortgage if you want to add cash.  Using the above criteria simplifies that.

Seller financing is the same as bank financing etc. anyway.  So if you wanted to "replace the mortgage" you can by using seller financing.

Most people do not have cash reserves to replace a mortgage so they have to take a debt instrument in order to fulfill the two criteria above.  And that is where the confusion has come in.

The location of your QI really isn't a big thing.  You hit on part of it - your buy and sale are going to be in different locations.  And most QIs like us who do nothing else operate nationwide.  The smallest of QIs locally might not have the expertise to handle any hiccups.  The largest national intermediary is only going to be as good as the representative assigned to you.