Hello all. I am selling a property and was thinking about keeping my option for 1031 exchange open.

My question is this: can I take some of the money and keep a certain amount of money in a 1031. Basically, can I take 50% of the profit and pay capital gains and then use 50% for a 1031 exchange. If I do that, do I have to put it all in the 1031 and then just pay capital gains on the residual, or can I delineate different amounts prior to closing? How hard is it to get your money out of 1031 if I don't find a suitable property?

I know, I'll speak with my realtor etc, just wondering if anyone here knew an easy answer.

JR

Pretty sure you have to use it all on next purchase, has to go into a special separate account at closing and is not able to touch any of your personal accounts at any time. If you don't find anything to buy, you have to pay tax on the entire amount. There are even rules that the real estate purchase has to be a similar use property. Very restrictive, but great if it fits your agenda.

Yes

You can take whatever amount of the proceeds you wish and place the remainder in a 1031, but whatever amount you take possession of you'll pay Uncle Sam

Could your property possibly qualify for a 1033 exchange? Supposedly is easier to do with less regulations and does not have to be like kind.

Don't think a 1033 is what I'm Looking at.

I basically want to keep about 50-75% of what I make (knowing I'll pay taxes) and keep around 25% or so in 1031.

The place I'm selling was purchased entirely as an investment so I think I should be good to purchase most other property as long as it's not my residence?

JR

Mas89 said:

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Could your property possibly qualify for a 1033 exchange? Supposedly is easier to do with less regulations and does not have to be like kind.

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A 1033 is usually reserved for involuntary conversions (losses due to natural disasters, eminent domain, etc.). That's why the terms are more flexible.

I put 100% of net proceeds into the sale of raw land held for investment into a 1031 account. Then used about 90% for purchase of the new investment raw land. After closing on the purchase, I then received the remaining 10% of the funds. I was taxed at the capital gains rate on 100% of the funds that I received....the 10%.


This was all done under the careful eye of the 1031 company and my large CPA firm. All of their advice was consistent and the tax return has been filed and reviewed.

So.....if done consistent with the 1031 code, I'm sure the answer is "yes" to your question.

What HarleySpoon said. The only thing I would add is that the taxable portion (in your case, cash) is called the "boot".

https://www.realized1031.com/blog/what-1031-exchange-boot

You can pick the boot. I'd still run it through the QI.