All Forum Posts by: Chris M.

@Jessica Ramsey, Great answer by @Basit Siddiqi.  If you set up your sale so that it qualifies for a 1031 exchange you don't need to worry about the mortgage on the property.  When you do a 1031 it acts like any other sale.  There is a contract price and from that are deducted closing costs.  That is your net sale.  From the net sale the mortgage is paid off also on the settlement statement and only the net proceeds (left after the net sale pays the mortgage) go into your 1031 exchange account.  So the mortgage is always satisfied (as long as it is against the property you  are selling).

What that leaves you with though is the responsibility to do two things if you want to avoid all taxes.  You must purchase at least as much as you sell (the net sale) and you must use all of the proceeds (the net proceeds after mortgage pay off) in the next purchase or purchases.  That doesn't strictly mean you have to take out new mortgages.   But most folks don't have access to that kind of cash.  Or they want to use leverage as part off the business model.  So they purchase the new properties using the exchange proceeds as down payments and taking out a new mortgage for the remainder.

 You will pay tax on that income.  Honestly look for the best returns you can even if it generates taxable income. I'd rather make more money and pay tax on it than to try to not pay more tax.  I'd rather make 2k and pay tax on 1/2 of it than to make 1k and not pay tax.

You will not be able to reduce your income from the LLC unless that LLC held the real estate. Either way I would be careful to not keep both assets together (RE and your business).
Solo 401ks are my preferred investment Specifically the Roth 401k.

Feel free to ask if you have detailed questions. 

 Hey Chris, thank you brother, I will reply to your PM as soon as possible my friend, thanks for reaching out!