I had an interesting question pop up today and wanted to get opinions on a 1031 exchange. I've never done one and dont know the process, so curious.

Scenario: Person owns mineral rights and may be selling soon. They are hoping to pay off their remaining primary home mortgage with the money from selling the minerals.

Question: Can they 1031 the revenue from selling minerals into paying off their mortgage and avoid taxes? If so, are there any entities or hoops to jump through, such as putting revenue into an LLC and "selling the home" to the LLC?

You can if your mortgage is for your business and it has to be part of what your selling. But you have to replace that mortgage with a new one of equal or greater(?) value, as per my understanding. I'm more familiar with trading up on real estate but to my knowledge you cannot sell your mineral interests and use those proceeds to pay off your personal home mortgage. That's not what the exchange is for.

You'd have to pay the capital gains on your 1031 proceeds and then turn around and pay your own mortgage.

Find a CPA or attorney who specializes in 1031 work. Run your scenario by an expert, especially since its a 1031 question.

Sounds like others that know much more than me have answered the part about applying to mortgage but these folks specialize in 1031 exchanges involving mineral rights if there are other questions about the process.

Www.peregrine1031.com

Not an expert- but, you can't purchase, in a 1031, where you or immediate family will live. By the way, mineral rights Can be bought or sold in a 1031 exchange.