Is hybrid 1031 and carry partial note possible?

[Todd Willhoite]

I am thinking of selling a property that I have held almost 5 years.  The buyer has offered an amount close to what I want.  Can I do a contract where he pays that amount to a qualified 1031 intermediary and for the remainder of the amount I want I do a seller finance note secured by a second mortgage on the property?  Will the fact I am getting part of the proceeds with a note mess up the 1031 exchange?

[Dave Foster]

@Todd Willhoite,   It doesn't have to mess up your 1031 at all.  There's a couple of ways to handle it depending on your individual situation.  You can take the note as boot and shelter the remaining in your exchange.  Or you can include the note in the exchange and trade it for cash and then completely defer all tax.  

And Hey @Sam Shueh, don't be such a grumpy Gus :)  I can think of at least three ways our clients have completely eliminated the tax on gain for their lives and the lives of their descendants using the 1031 exchange.  You only pay if you want to!