Used 1031 for purchase, Can you still Refi-Cashout tax free ?

[David C.]

The point of a 1031 exchange is to defer tax payment on a property until future sale.  That being said, what does this mean for refinancing-cash out in the future?  Can you still do this?

In other words, if you refinance and take cash out of a property that was purchased with 1031 funds, are you then taxed on that portion of the 1031 money?  Is there anyone with personal or profession experience who could answer this ?

Thanks in advance.

Dave

[Brad Hammond]

Hey @David C., you should definitely double-check with your CPA on this one.  However, in my opinion, since a refinance is not a taxable event, you should not need to pay capital gains on that money.  No matter if the sale was through a 1031 or not.