How to get money out of your 1031 exchange! LEGALLY :-P

[Brandon Elliott-Pandey]

I had a thought the other day and after asking around from a handful of agents, seems like this is possible. 

I am a REALTOR and have property that I am interested in 1031'ing. If I pay a buyers agent fee and sellers agent fee (to me) I can LEGALLY collect a succuss fee of selling my property in a 1031 and roll over the funds into the next investment.

Has anyone done this before and did it work out for your investment plan or hinder your growth. Looking for real life examples! :-)

TIA

[Dave Foster]

@Brandon Elliott-Pandey, yes this can actually be a very strategic decision by you.  As others have mentioned it isn't entirely free.  There would be your brokers cut.  And you would pay potentially ordnary income tax on the commission.

the time to consider this is if you are having a down year or have some pent up losses you can bring to bear.  You can then offset these operational losses against your income.

However, if you're having a great year income wise with no losses to offset then you would not want to take a commission.  Because you can leave more money inside the 1031 where it will stay tax deferred.

and the 3rd option (just because I'm a Goldilocks guy) is to not take a commission (you don't pay ordinary income tax).  Instead, do the 1031 but take out some cash for what you need.  This is the partial exchange referred by @Sean O'Keefe and @David M..  You do pay tax on that amount.  But it is capital gains rate not ordinary income.