1031 Exchanges

User Stats

5
Posts
1
Votes
Tyler Cote
1
Votes |
5
Posts

Using 1031 funds for rehab?

Tyler Cote
Posted Aug 10 2019, 16:10

Wondering if there are any set of conditions under which it’s possible to use tax deferred proceeds to rehab the newly acquired property. I hadn’t come across anyways of doing this, so assume the answer is no, but wanted to pressure test that assumption nonetheless.

To make my question more clear, let’s assume I’m selling property 1 for $400k. Will net $200k in proceeds. I’m buying a property 2 for $500k, financing with 25% down.

1a. Is there any way I could put $125k down, and then use the remaining $75k to rehab that property?

1b. If not, is there any way I could subdivide the lot (let’s assume this is kosher), then use the leftover $75k to build on the newly established plot of land?

2. If no to all of the above, is the next best course of action to take out a HELOC? I could only do this using my primary residence.

I’ve found this forum incredibly helpful since I discovered it a few weeks back — thanks in advance for any insight!!

Loading replies...