Need Advice: How to Structure Private Money Deal & Defer Tax

[Tim Hardeman]

I have 12 houses that are seller financed (lender’s name is Shirley). Total loan balance $1.130 mil.

Shirley bought these houses in 2012 at a discount. I am estimating $500k was the purchase price for all 12.

Current fair market value is $1.9 mil.

I am planning on refinancing into a commercial loan.

Once I refi and Shirley gets paid back the $1.130 mil, she is willing to lend the whole amount back to me.

1) Will Shirley be taxed capital gains and is there a way to avoid / defer this?

2) If she lends the whole $1.130 back to me, will she be able to defer paying taxes on it?

3) Could we do a 1031 exchange? When I refi and she gets paid back, what if she takes her proceeds and uses them to purchase an apartment building in her name? And when that happens, can she then sell the apartment building to me with her being the lender?

4) Any other recommendation or suggestions for structuring a deal like this?