Making the most of the 1031 Exchange
Looking for some guidance in the 1031 exchange process. My company is looking to exit a deal where we have a huge capital gains exposure. We are looking at the 1031 exchange as a way to defer the capital gains from the sale BUT we would still like to harvest some cash from the sale without paying gains on those dollars. I was told by our tax advisor that we can use the 1031 to defer the majority of our gains and then turn around and refinance the property which would allow us to take those proceeds out tax free.
My question is 1) are re-finance proceeds in this scenario excluded from capital gains? And, assuming the above is true, 2) can we 1031 into a value-add deal, lift the value of the asset and potentially take even greater refi proceeds without triggering capital gains.
Hi Associate 1 in RE - Res, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:
More suggestions...
Fingers crossed that one of those helps you.
Cash out refinance is not treated as income and therefore non taxable
Yes & Yes. Just make sure to listen to your tax guy on matching the debt you need to put on the 1031 property so that there is no boot.
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