1031 Exchange with Family Member

[Denise Kwok]

In search of some clarification re: 1031 exchanges.  If my parents are selling an investment property for $1,000,000, and they'd like to purchase a single family home for $1,200,000 to rent to me at market value, is it possible for me to pursue a mortgage on the $200,000 difference?  Or would my parents have to take on the mortgage themselves?

Many thanks in advance.

[Dave Foster]

@Denise Kwok, There's nothing wrong with that scenario other than keeping good documentation.  You can take title to the 200K as a tenant in common with them.  My guess is that the lender will want all owners on the mortgage. But the overall plan is solid.  Your parents will want to make sure they're treating their % as investment and actually rent it to you.