Tax question about selling a 6 plex I bought 17 yrs ago

[Tommy Sowell]

Hello

I bought a six plex 17 years ago in San Diego for $215k and after 4 years I refinanced it for $290k. The loan after 13 years is now $210k. If I sell the place and have the 1031 pay off the loan and invest all the rest of the money in a new place will I have to pay tax on the $210K? There is about $100k recapture on the property.

Thank You

Tommy

[Dave Foster]

@Tommy Sowell, buying down in value in a 1031 whether by taking cash from the sale direct or by taking a lower mortgage has the same consequence.  The dollars bought down are treated as gain and yes you would pay tax on that amount.  You would defer the remainder of tax and depreciation recapture.  So it's still a viable option for you.  If you're going to do a partial exchange maybe think about also taking some cash to pay the tax you'll incur on the 210.