a what if 1031 scenerio

[Maria D'Aura]

What if I sell a rental that made great gains in a great appreciating market and 1031 buying a rental in a market that has good rental returns, but isn't likely to appreciate much. Then after 3 years I sell the rental for the same amount I bought it for and don't do a 1031. Any capital gains due?

[Bob E.]

You can keep doing 1031 exchanges and keep deferring the taxes.  The question here is "What is your goal"?  Are you looking to move out of real estate entirely, get your money back for other things, expand into bigger properties?

If you want to move out of real estate entirely you can 1) sell and pay capital gains and recapture, 2) Sell with owner financing  to spread the gains over the term of the loan.

If you are looking to get you cash out you can do a cash out refinance or get an equity line secured by the property.

If you are looking to expand into bigger properties you can do another 1031, or do a cash out refi for the down payment.