Is there a way to take $$$ from 1031 and...... - Posted by Scott P.

Posted by Ronald * Starr(in No CA) on July 31, 2003 at 22:02:16:

Scott P----------------

Well, I think the conventional answer here is “no,” as you suspected. But, I like to solve problems, so let’s think a bit.

Hmmm. If you were not fully the owner of the property, then you could buy out a co-owner and thus put more equity into the property. I actually did do a deal like that. My co-owner was happy to get the money–a great profit for his time and cash investment–and I was happy to get complete ownership of the property.

However, if you already own the property fully, to get to a part ownership situation you would have to transfer a part ownership to somebody else. I think that would be a taxable event. If you could do so and it were not a taxable event, then you might be able to do that. Transfer a part ownership of the property in which you want more equity. Then buy out the co-owner with the exchange funds.

A multi-step approach might work. Exchange away the old property for another property. A few months later or a year later, or in the next tax year, refinance out part of the equity of that new property. Then use that refinance money to pay down the loan balance on the property where you want more equity.

Or, use positive cash flow from the acquired property to make extra principal payments on the loan for the property in which you want more equity.

I really don’t see the reason to have more equity in a property. I’d suggest that look at your investing as a portfolio. Have the amount of equity and amount of leverage you want overall in your portfolio. Don’t try to push one individual property one way or the other. Then you won’t have to manuever to do something that is difficult or impossible.

Good Investing*Ron Starr

Is there a way to take $$$ from 1031 and… - Posted by Scott P.

Posted by Scott P. on July 31, 2003 at 12:02:36:

Hey all,

Is there a creative way to take $$$ from a 1031 sale and reinvest them into a property I already own. I know that one rule of the 1031 tax exchange is that the new prop must be worth more than the one sold, and I believe it must carry a greater debt burden…if this is true than the answer to my question must be no. My desire would be to find a way (through refinancing or creation of new ownership through land trust) to sell off one property in 1031 and transfer equity into another which I already own but would like to add some equity to. Any thoughts?