Need some creative advice on how to maximize current situation...

[Loc R.]

I'm in Los Angeles.

Purchased triplex (three 3/2 houses on a lot) for $650K a few years ago as an owner occupant. This was my first property. It appreciated enough that I took out a HELOC to eat up my student loans (I went to grad school) for $150K.

So now, I'm trying to figure out how to exchange up to a bigger property. However, my math looks like this:

$800K owed, vs. best case scenario of me selling the property for $1M. That leaves me with $200K to 1031 exchange. However, with a 5+ units building $200K is equal to 30% of $667K, and my understanding is that I would need to exchange it into a building that cost more than the previous building I just sold.

So, the only way I can sell the triplex and minimize my tax liability is to find a owner of a 5+ unit building that costs more than $1M to carry back some of the note with $200K down?

Thoughts?

Thanks.