What would you do...?

[Ed L.]

Just looking for some guidance on a important decision.

I'm in the process of selling a parcel of land that is currently paid for.

My basis in the property is pretty low. My plan was to unload the property before cap gains rates increase.

My original intentions have been to sell the land and apply the funds towards the loan on a small strip mall I own.

I should be closing on the property within the next month, so I've been over analyzing all my options. .

If I convert the funds into equity it would basically be earning 5% which is the current interest rate I'm paying on the commercial loan.

My thinking today has me more inclined towards doing a 1031 exchange and purchasing a 4 plex.

My goal would be to purchase the 4 plex for 100-110,000. Gross $2,000 per month. Leaving me with $12,000 per year in clear theoretical profit.

Roughly a 12% return vs a 5% by investing the money in the mall.

At the same time I would pick up some added depreciation on the 4 plex and also would help diversity my portfolio instead everything tied up in the commercial property. I'd also save some funds on taxes by doing the 1031. Although that might backfire if Capitol gains rates go up.

Is this sound reasoning?

Should I hassle with the 1031 or should I just pay uncle sam while the rates are still low?

What would you do/done in similar situation.