All Forum Posts by: Tim Turner

@Dave Foster, got it, thanks again! I think we'd be able to defend a valuation of $285k for the investment portion.

@Dave Foster, thank you for your reply! I may not be using the term "gain" properly...or maybe I am and I'm getting the valuation ratio wrong. Here are the details:

• Relinquished Property Sale Price = $310,000
• Closing Costs = $25,000
• Mortgage Payoff = $35,000

So, after the two transaction costs listed above, we'll walk away with $250,000 deposited into the QI fund.

That would be 1/3 of the new property cost, roughly equivalent to the value of the investment portion...or does the investment portion need to be equivalent to the actual sale price of the relinquished property--in this case, $310,000?

One thing I think I did learn yesterday is that based on my original calculation, putting the $250k toward the investment portion would result in taxable book on the mortgage payoff of $35,000 because no equivalent debt will be left on the investment portion (only the mortgage debt acquired to obtain the residential portion of our purchased property). However, we can live with that in exchange for being able to put the bulk of this payout into this combo investment/residence purchase.

Thanks for your response! I believe it is possible, though, as indicated by the same person I think you are referring to in this other thread: https://www.biggerpockets.com/...

We will receive a net gain of $250,000 from the sale of a relinquished investment property and the funds will be held by a QI. We want to purchase a mixed-use replacement property for $750,000--a home with a detached apartment to rent out alongside a primary residence we'll move into as owners. The value of the replacement property is apportioned using a ratio of 66% residential to 33% investment—or $500,000 residential value to $250,000 investment value. Can we finance the purchase of the replacement property using the $250,000 in exchange funds as the down payment for the loan on the new property? Does this satisfy the requirement that the investment portion of the property (33% or $250,000) be paid for with exchange funds while the residential portion of the property (66% or $500,000) be paid for with only non-exchange funds—in this case, the funds borrowed from the lender? (I've set aside closing costs for the moment--let's say that the seller of the replacement property has agreed to pay all closing costs).