How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Robin D. Your Own Question
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13577
Experience:  15years with H & R Block. Divisional leader, Instructor
14155347
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

If I 1031 exchange the proceeds from a rental property, do

This answer was rated:

If I 1031 exchange the proceeds from a rental property, do I have to incur debt on the property I exchange into?

Robin D :

Hello and thank you for using Just Answer,


The general guidelines to follow in order to defer all the taxable gain are:



  • The value of the replacement property must be equal to or greater than the value of the relinquished property.

  • The equity in the replacement property must be equal to or greater than the equity in the relinquished property.

  • The debt on the replacement property must be equal to or greater than the debt on the relinquished property.

  • All of the net proceeds from the sale of the relinquished property must be used to acquire the replacement property.

Robin D :

The debt on the replacement property must be equal to or greater than the debt on the relinquished property. If the debt on the replacement is less then then that portion would not be deferred.

Robin D :

My goal is to provide you with excellent service today. If there’s anything else I can do, let me know – it’s been a pleasure working with you and I hope to assist you again soon!

Customer:

Thank you for your response. Must the 1031 meet ALL of these guidelines or just one or a couple of them?

Robin D :

It must meet all.

Robin D :

Any amounts that do not get used for replacement would be taxable. So not meeting does not mean it is not 1031 but would mean that protion would not be deferred under 1031.

Robin D. and other Tax Specialists are ready to help you