1031 Exchange Question

[Ryan Galloway]

Hello hive mind,

I have a question about 1031 exchanges: is it possible to sell a property and 1031 the proceeds into another property we already own to pay off the balance? If the answer is no, are there any tricks or workarounds?

Bonus points: is that a good idea? why or why not?

Bonus bonus points: looking for referrals for an airbnb/landlord friendly real estate CPA in the Los Angeles area.

Thank you!
R&D

[Dave Foster]

@Ryan Galloway, The 1031 must be a sale of investment property followed by a purchase of investment property.  You can't use the 1031 to pay down the mortgage on a property you already own.  About the closest you can get would be to do a 1031 and sell and buy another piece of real estate.  And after that do a cash out refinance and use the cash out refi to pay off the property you want to.

It doesn't reduce your debt.  But it repositions your debt maybe to your advantage.