1031 Exchange, Where can you put your gains?

[Wesley Hoover]

I am currently reading the Loopholes of Real Estate by Garret Sutton, and a question I have popped up. If I am purchasing property B using the gains I have from selling property A, does all of the gains acquired have to go into the down payment or could they go towards repair costs? For example: If I sold property A for $130,000 and bought it at $100,000, could I break up the $30,000 into property B? Put $20,000 down to purchase then the remaining $10,000 towards a new HVAC or roof?

[Michael Plaks]

@Wesley Hoover

You picked up an excellent book, however it is very technical and hard to understand for beginners.

This is not how 1031 exchanges work. You do not transfer $30k, you transfer $130k. You cannot touch the money, it is held in escrow by a 3rd party called a qualified intermediary. 

One of those intermediaries, @Dave Foster, is joining our conversation in a few minutes. He will tell you how 1031s can make you wealthy, protect you from Coronavirus and reconcile you with your ex. Jokes aside, Dave is a great resource.