All Forum Posts by: Anshika Rani

@Anshika Rani, Any loan that is recorded against the property must be paid off in order to sell the property. In your example, if the $40K was recorded against the property then it has to be paid off. However, that does not change your reinvestment requirements.

1. You must still purchase at least as much as your net sale ($180K ish).

2. You must use all of your cash proceeds to do so - ( $140K instead of $180K if the loan wasn't recorded).

Thank you Dave. Does the realtors commission and other recordation cost gets backed out of the 1031 number requirement as well? So for example if the realtor fees is 9k in fees etc so 180k minus 9k= 171k investment requirement?

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So something just ran through my mind here...If the fix and flippers can't do the 1031 exchange that means they are taxed as ordinary income. Which can be offset against SEC 179 and bonus depreciation assets if I am understanding this correctly?

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Quote from @Brandon Bruckman:

180k or more can be purchased to complete the exchange (less any permissible selling expenses). You would need to acquire the same amount of debt or add cash.

In reading your post, you might have a bigger problem. You can't 1031 exchange flips. The property has to be held for investing purposes, not for sale.

Thanks Brandon and Bill. We have held it for a few years as investment so that should work out from that view for a 1031?

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Hello Everyone,

New to the forum but not new to real estate :). We are rehabbing a property right now for flip and putting in almost $40,000 into it as a loan through one of our own sister companies with an actual loan agreement and interest terms.

What happens to this loan that we take for the rehab after we sell the property before we do the 1031 exchange? Do we have the ability to pay out this loan from escrow once the property sells?

Do we have to keep paying that loan out of our own pocket even when we do the 1031 exchange?

So for example if the property is bought for $50,000 and we put in $40,000 into it now on the cost basis is around $90,000. But if we sell the property for 180 K. We need to pay back the lender. Can we pay back the lender from the sale price and still buy the next property for 180K minus 40K that is 140K or does the new property has to be 180K regardless of the fact that we have to pay pay the lender or not?

Let me know if further clarification is needed. Thanks.

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All Forum Posts by: Anshika Rani

Anshika Rani has started 1 posts and replied 4 times.

Post: What happens to the loan when you sell your 1031 exchange property?

Post: What happens to the loan when you sell your 1031 exchange property?

Post: What happens to the loan when you sell your 1031 exchange property?

Post: What happens to the loan when you sell your 1031 exchange property?