You can sell a property for $3 million, buy another for $3 million and still recognize $300,000 of gain in a section 1031 exchange.

You can sell a property for $3 million, buy another for $3 million and still recognize $300,000 of gain in a section 1031 exchange.

That is what happens in this example. The owner takes $300,000 of cash out of the exchange and borrows more to buy the replacement property. The properties have the same price, but the owner has also taken cash home.

You can bring in new cash instead of replacing all the old debt. Borrowing more does not work in reverse. It does not offset the cash you receive.

The financing and the cash you want to keep need to be planned together. Today's Daily Tax Planning Strategy shows the numbers.

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