Need pro's and Con's with Selling to Buy

[Johnna Kay Roark]

We have a rental we are looking at selling , we used a Heloc to rehab it but technically own it free and clear. We have a opportunity to possibly buy a multi unit property, so down fall Cant do a 1031 paying off Heloc. So will pay aprox. 25k in capital gains Looks like we will cash flow about 1K less to start with this new deal but long term rents can slowly be raised and its multi units.  Any input will be helpful.  

[Bill B.]

So go with @Kevin Sobilo ‘s plan #4.  Certainly worth doing to save $25k. 

Do the 1031, invest all cash received from the sale to avoid all taxes. Then either refinance the new purchase or just slowly pay down the Heloc with the new income. It should obviously be higher than the current property that’s being used to make the payments   Any payments, refinancing, or payoff/replacement plan that costs you less than $25k is a win.

You could reach out to your CPA or a 1031 expert like @Dave Foster and find out if there’s anyway you could get the IRS to accept your proof this Heloc was spent on the property you’re selling. But that could be a long shot.