CD then Refi planning 1031

[Veronika Von]

Hello, 

Currently in a process of refinancing a property we had under CD for couple of years with seller financing (owner still have mortgage in place). 

Is that true that you can not collect any money at the closing? Our mortgage company going back and forward having hard time to match the numbers. If we collect $300 at the closing will it make 1031 impossible?

Thank you very much 

[Dave Foster]

@Veronika Von, I think everyone is saying the right and same things just coming from different directions.  If you're refinancing now that you're receiving the deed then you can take any cash you want out of the refinance.  Even though you have not held the deed to that property my guess is that the CD would be looked at by the IRS as "risk of loss" passing a long time ago and that your the beneficial tax payer for the property and what you are doing is simply refinancing a property  you  own - no tax.  Even if it would be looked at as a new purchase that is not the trigger for a 1031.  The sale is the trigger so you wouldn't worry about that now either.

If there's a sale somewhere in the mix then your exchange does not have to blow apart simply because you receive some cash.  It is not all or nothing as long as you're willing to accept some tax liability on the boot you taks out.