1031 exchange-can I exchange 2 houses for the sale of 1?

[Chandra Faulk]

If I sell a property for a certain amount, do I have to buy another property that is similar in price? Or can I buy 2 properties? For example, if a sell a property for 130K, but want to buy another for 65K, can I use the remaining  65K to put towards a 2nd property and still qualify for a 1031?

[Dave Foster]

Thanks for that shout out @Scott Esmail.  @Chandra Faulk,  What you're refering to is what we call a diversification exchange.  Like Scott said, it's not the number of properties you purchase.  As long as the total of whatever you purchase is equal to or greater than the net sale of your old property you'll defer all tax.  

And whats even better, you can allocate your proceeds any way you want.  So you could purchase one property for all cash or a larger down payment.  And then purchase a second property with higher debt to fill out your 1031 exchange.