Updated about 4 years ago on . Most recent reply
What does everyone think of this strategy?
I have a house thats worth $535k paid off. I want to sell it to get some cash, however, I don't want to be stuck with the timelines of a 1031 exchange. Is it better to just refi out as much as I can and then sell it so all I have to do is pay tax on a small portion of the profit?
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- Qualified Intermediary for 1031 Exchanges
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@Mike Rodriguez, a refi doesn't affect your tax. So be careful because it is possible to refinance to the point where when you sell there is not enough cash from the sale to pay the tax.
Tax is not based on debt. It is the difference between your basis (what you purchased it for plus capital improvements minus depreciation recapture) and your net sales price.
@Prestin Sokoloski, has the right idea. Forget selling right now. Just find the right replacement and get it under contract. Then sell. As long as you close the sale before taking title to the purchase you can make the 1031 work.
- Dave Foster
