Need some help clearing up a 1031 Exchange debate

[Adam Briceland]

I am looking for any help clearing up my understanding of a 1031 exchange.  I was under the impression that if you had several properties you are allowed to take all the proceeds from those properties and roll them into one property (single family) regardless of the size.  As long as you don't touch your proceeds and do everything that the 1031 exchange rules outline about where the proceeds need to go and be held, how long you have to identify a property and then close on that property.  

I was talking with an acquaintance and the 1031 exchange topic came up.  They said you can't roll the proceeds of duplexes and four-families (bigger properties) into a single family.  That you will have to use the proceeds to purchase a larger property (6 or 8 unit property).  

Thanks in advance,

Adam 

[Dave Foster]

@Bear Geiger, A couple nuances that might help you.

1. You only have to purchase at least as much as your net sale if you want to avoid all tax.  You can take cash out and/or purchase less than you sell.  But you pay tax on the difference.  Sometimes a partial exchange can make sense.

2. You can sell one more expensive property and purchase multiple replacement properties.  As long as the aggregate total is at least as much as your net sale you'll defer all tax.

3. You can allocate your net proceeds in anyway you want.  Use some of the proceeds to purchase on property for cash and use the rest as down payments on others or however you like.  This too can encourage strategic thinking with where you're wanting to go.