Strategy for a 1031 exchange?
We have successfully made a deal on an REO home, but have some questions on a 1031 exchange for it. The idea is to take the home (purchased for $50k), put $15-20k into it and sell it for up to $100k.
1) The purchase price of the home was all of our cash plus $8k on a credit card. We will use credit for the rehab as well (totaling about $28k). Lets just say we sell the house for $100k, making a $50k profit. Is there a way to pay off the credit cards with the profit, without paying taxes? If we do have to pay taxes on the portion we paid the debts off with, can the remaining be kept in the 1031?
2) Does my realtor work with an intermediary?
An accountant told us it would be cheaper to just pay the taxes on the profit (whether its in our LLC or personal name) than to "pay the lawyers to do a 1031 exchange". Any thoughts on that statement?