1031 Exchange - Timing Is Everything

[Dan Burghardt]

I am looking to move forward on a 1031 exchange and trying to decide on a "Qualified Intermediary". I am already putting down 25% on two new duplexes (pre-rented) which leaves me with an extra 50k. Should I investigate buying a 3rd property or just split the sale monies into both properties? I don't want to get hit with the capital gains tax.

[Dave Toelkes]

If you have already sold the property you are exchanging (the relinquished property in IRS terminology), then it is too late to open an exchange.

In this case, does not matter what you do with the proceeds of your sale, all the profit is taxable; first as unrecaptured depreciation, then as capital gain.