Finance example of 1031 echange
I've done a search on this and couldn't find the answer. Sorry if I'm covering old territory.
I understand the 1031 exchange pretty well. I have a very specific question.
Do I have to fund the downpayment of the purchase property with cash on hand? Or does my equity roll over of the 1031 satisfy this?
Example:
Property to sell: $690000
Less selling costs (simplified): $41,400
Net sales: $648,400
Less current mortgage: $160,000
Net profit: $483,600
New property purchase price: $648,400
QUESTION: Does my net profit from sale of old property of $483,600 count as a down payment? Therefore I don't have to come out of pocket 20% of the purchase price ($129,700) of new asset?
OR, do I have to pay the 20% out of pocket for the new asset?
Thanks in advance for input. I really did try to read up on everything before asking. Maybe I'm just making this more difficult than it really is.