Take the Tax Hit or 1031?

[Will Barnard]

I have a problem and would love to hear some opinions on this.
Here is the scenario: a $1.5M tax exposure (net profits on sale of property) and a lack of desire to pay Uncle S. and CA 50% of that ($750k).

So the question is, would you pay the tax and keep gong or would you 1031 exchange this into a buy and hold deal (perhaps commercial deal or 100+ unit apartment building) to avoid the tax?

If you pay the tax, keep in mind you would have until next year to pay it so perhaps take the $1.5M and reinvest into more deals that would net profits to pay s the tax so at the end of the day, perhaps you would still be left with $1.5M or 1031 and with the buy and hold, obtain cash flow passively to semi passively for years to come and not pay any tax.

Your thoughts are appreciated.
- Will Barnard

[Carl Schmitt]

I don't know much about 1031 so I could be way off. However, is it possible to take the 1.5 mil, buy a property all cash using a 1031, wait the year to meet seasoning requirements, and then cash out refi the property? You wouldn't be able to take 100% out obviously, but 75% out with 25% equity is better than 50% to Uncle Sam.