1031 Exchange Tax question

[Account Closed]

Good morning I completed my first 1031 exchange in 2019 however I am no being told by the CPA we incurred a mortgage boot due to not purchasing a property of similar sales price. 

Property sold $1,200,000

Payoff $700,000

Proceeds $500,000

Proceeds were rolled into the 1031 Exchange and used to purchase like kind properties of different purchase prices one was $225,000 and the other was 275,000 totaling the proceed amount of $500k. 

My CPA is now saying we needed to buy a like kind property of the same sales price of $1,200,000 and we now have to pay the full tax on the 500k which is roughly 60/70k to Uncle Sam. 

Any of you smarter people on here can help me out ? I am about to jump from 30th floor. 

thx!!!

[James Storey]

Yikes! Yeah that is a tough one. Your CPA is correct. Looks like you didn't get a mortgage on the new properties. Could you potentially refi some funds out of those assets and buy a larger asset with the proceeds? I mean, you are not working with a lot of time but maybe you could also utilize some hard money as well if you aren't able to get through refinance in time. 

I am surprised your 1031 intermediary didn't say anything to you while you were making the purchases. Wish you the best.

James Storey, CCIM