HELOC at closing of 1031 exchange?

[Greg B.]

I have a question about 1031 exchange financing.  I'm selling a building in a very hot market, and it's going to be difficult to find enough replacement property in time to meet the deadlines.

One strategy that I'm considering is to put extra down on the replacement properties and then get that money back with a HELOC. The purchase price of the replacement would be greater than the sales price of relinquished, as would the loan amount. The "extra" money paid down would use up all the proceeds from the relinquished property.

eg:

eg, if I found a replacement property for $600,000 and put 40% down:
loan = $360,000
down = $240,000

at closing, also get a HELOC of $90,000

Total loan = HELOC + Loan = $360,000 + $90,000 = $450,000
LTV after HELOC = $450,000/$600,000 = 75%

I would then draw on the HELOC later for renovations/other properties.

I talked to my mortgage person, and it's allowed from her perspective if the loans are simultaneous at closing.    Is this in violation of 1031 exchange rules?