1031 Exchange after refinance??

[Cassidy Burns]

Hi BP,

If you have an investment property that you did the BRRR strategy on but want to eventually do a 1031 Exchange, does the capital gains credit based off of the original purchase price or the new loan on the property?

Thanks!

[Corby Goade]

Capital gains are based off of your "basis" in the property, regardless of funding, refi's etc. Your basis is the actual money you have in to the property to get it rent ready and maintain it, subtracted from the value of the property when you liquidate. If you are thinking of this, call the title company you closed with and meet with their 1031 specialist. If you don't have one already, get an accountant who knows REI well and go over the details with them. Those two pros will be able to give you some guidance on the best way to handle your next step. Good luck!