1031 Exchange - Difference in sell/buy amount

[Jason Yee]

Here’s the hypothetical situation:

I sell an investment property for $1.5mm. Then 1031 to buy another investment  property at $1.0mm. Difference of $500K.

1. Can I use the $500K difference as a down on a second larger property (say a $2.0mm investment property)?

2. Can I use that $500K to buy a smaller investment property outright for $500K.

I honestly don’t know if I’m understanding 1031 so hopefully this makes sense and thank you in advance for anyone’s help! Explanations in simple terms would be much appreciated!!!

[Wayne Brooks]

@Jason Yee Yes, you can sell one properties and buy two properties, both properly identified and closed within the 180 days, in a 1031 exchange.

The 2 essential rules....

Buy as much or more (total) as you sell

Use All of the cash received from the sale toward the purchases.

@Dave Foster can answer in more detail along with any additional questions.