Hi All,
Got an interesting situation and wanted to see how you all would handle it.
Bought a lake house in TN (near my hometown) for $250k. 50k. from our HELOC and then financed the other 200k. We were going to use it as a STR but by the time we got it fixed and ready to go, we decided it was too far away for us to manage. We put about 75k into it, mostly on the HELOC. We put it on the market and will close on it in about 2 weeks for 500k. We were thinking about 1031 this into a cabin in the Blue Ridge, GA area as it's only about an hour away. We like that area for STRs, close enough for us to manage as well. So the question is, can we 1031 exchange this and defer the taxes (I believe we can) beyond that we have about 100k on our HELOC that we would like to clear. Can we take the proceeds and pay that off along with the primary mortgage? Would we pay taxes on that 100k towards paying off the HELOC? If not, is there such a thing as a partial 1031? In this scenario, we roll about 100k into the new property as the down payment and then use the other proceeds to clear our debt (primarily from fixing up this property).
Thanks in advance.
