Add cash to 1031 exchange

[Account Closed]

I am considering selling one or all of my properties in order to get into the multi-family business.  On certain deals if I assume that I need 25% down, I could exchange one property I have and add a bit of cash to make it work - but I don't know if the adding-cash part can be done.  I did some searches through older forums but didn't come across an answer.  Any thoughts? 

[Dave Foster]

@Account Closed As mentioned above it's perfectly acceptable to purchase a property bigger than the one you sell and bringing either new cash or debt to the purchase table.  One important point that you will want to follow with your CPA is that the new cash/debt is probably an addition to your basis in that property and as such adds to your depreciable allowance.

If you don't want to add cash to a purchase you may want to consider selling two or more of your properties and doing a "consolidation exchange" into one property of greater value. The most important thing is that to completely defer all tax you must purchase at least a much as you sell (net sale after closing costs/commissions).  This would allow you to keep cash in your pocket but still get you into the multi market you're looking for.

And if you're wanting to free up some of that cash you can do a consolidation exchange, purchase the new property for cash or little debt and then immediately after do a cash out refi to access some of the cash for your choice of uses.  By doing it this way the transaction remains totally free of tax but you also got cash for other purposes investing or personal.