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Updated over 2 years ago on .
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1031 exchange to pay off an investment property
Can I build a spec home and use a 1031 exchange on the profit from the sale of the spec home to pay off the mortgage of an investment property I already own?
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Dave Foster
Tax & Financial Services
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- Qualified Intermediary for 1031 Exchanges
- St. Petersburg, FL
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@Dustin Awtrey, Bad news - That's not going to work for two reasons.
1. The spec home isn't eligible for a 1031 exchange. Property that is eligible for a 1031 is property you purchased with the intent of holding for investment use. Your intent with a spec home is resale.
2. A 1031 must be a sale followed by a purchase of investment real estate. You can't exchange into property you already own.
- Dave Foster
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