1031 Exchange 'Nuts & Bolts'

[John Alosio]

Greeting BP community,

I have a question about the 1031 exchange

I understand the main concept but I am having trouble wrapping my head around the mechanics.

My situation: I currently own a duplex that I have lived in for over 2 years. I am looking to sell and flip it into another owner occupied Multi. When I sell, I am exempt for 50% of the capital gains. I’m looking to 1031 the other 50% into a larger house hack.

Question: When 1031ing these investment gains into the new property, I understand that all of these funds must go into the purchase of the house. What exactly does that mean? The full amount has to go into the down payment? Can I use it towards the closing costs / cost of procuring the 1031?

So I have a lot of numbers floating around in my head.

Lets say I sell the house for a combined gain of $100k.

$50k tax exempt - $50k 1031 exchanging

Lets say the new prospective 4-plex costs $500k ($375k investment - $125k owner occupied)

Now I have to figure out the minimum down payment I need to satisfy the $50k threshold.

My head is spinning just typing this up. I hope my question is making sense. Any help would be much appreciated.

Thank you all in advance.