Need some tips on a 1031 exchange

[Kenny Tran]

2 questions:

1. Does your 1031 exchange have to cover the whole down payment of a property? For example if my profit from a sale is 50k but I need 100k for a down payment for the next property can I bring in the remaining 50k or does the 1031 have to fully cover the down payment of the next?

2. Can I sell a portfolio of my rentals and 1031 it into 1 building like an apartment? I have 6 single family rental properties and was wondering if I can just sell them as a package and 1031 the combined profits into 1 building?

[Dave Foster]

@Kenny Tran, both of those are fine.  As long as you purchase at least as much as your net sales price (aggregate if selling more than one).  And as long as you use all of the cash from the sale (you can add to that from your own funds or borrowed money).  You will defer all tax.

When you sell several to buy one larger property it is called a consolidation exchange.  And the trick is to cluster the sales so they all have as close to the same timelines as you can.  So that you an name your replacement property on each 45 day list.  And close on the new property within 180 days from the sale of the first old property.