Can I pay off line of credit in 1031 exchange?

[Steve Buchanan]

I have a property that is held in a LLC that I'd like to do improvements on. I also have an unsecured business line of credit for the LLC/business. If I use the line of credit to make improvements and then decide to sell and 1031 exchange the property into a new property can I use proceeds from the sale to pay off the line of credit without triggering a taxable event? From my research I gather that if it were a HELOC tied to the property I could pay it off but what about a business line of credited tied to the LLC?

[Steve Buchanan]

@Dave Foster thanks for this response. This is kind of what I had gathered in my research. So if I want to use a line of credit for improvements the best way to get that money back without paying taxes would be a refi. If I want to get money for improvements and sell the property soon after then maybe getting a short term hard money loan which would be tied to the property is the way to go.