1031 exchange question

[Ian Russell]

I have a two questions with regards to a 1031 exchange

The first one is if I were to sell a property for 500,000 its paid off can I buy 3 new properties that cost 200 thousand each or does it need to be one property greater than 500,000?    Basically I am looking to sell a Property in Washington and buy 3 properties that are being built now in the South.

Other question is this.  If I were to sell a property in Washington state and buy a property in California can I do a 1031 exchange if I am going to move into the property in California?  Or do I need to do it strictly as an investment property?  Can I do it as an investment property first and move into it at a later date?     thanks

Ian

[Dave Foster]

@Ian Russell, You good on both cases.  Any type of investment real estate anywhere in the US can be sold and replaced by any other type of investment real estate of any number of properties anywhere in the US.

Washington to CA is perfectly fine.  

Selling one and buying several is fine.  As long as you purchase at least as much as your net sale.  And use all of the proceeds from the sale in your purchases you'll defer all tax.

This does give you some interesting options because you can allocate those proceeds anyway you want.  For instance, if there was a total of $250K of debt on those properties that woud leave you with $350K of proceeds to use to purchase $600K of real estate.  you could take $300K and purchase one property for cash.  And use the other $50K as a down payment on a $250K property.  This would allow you to purchase more than you sold.  And it also concentrates the equity in your remaining property.  So rather than having the time pressure of finding and purchasing a 3rd property for your 1031.  You simply wait until you find the right one.  And then do a cash out refinance of the debt free property.  Cash out refinances after a 1031 exchange are not a taxable event.