All Forum Posts by: Dan Cox

Thanks again Dave. Sorry to carry on..to hopefully simplify...if only way I can get the equity line to make repairs..about 25K needed..is to pay of the current utility loan which is 6K....if Iuse my own funds to pay off the 6K thereby allowing me to attain the new equity line...when I sell/exchange..the first and equity line will be paid...if I take 6K from the proceeds to reimburse what I had to use from personal funds..that will be considered boot? Correct?..and I would owe Fed and State Capital gains...which would be 15 Fed and 10 CA for 25% or about  1500 dollars? Any other way to accomplish what trying to do...without using own funds to make things work? Thanks again Dave. dan

Thanks Dave. I have another. I am trying to get an equity line on my rental to repair/upgrade to sell/exchange. The local bank will do but I have a first and a second...the local utility company loaned the money under their program..for a new HVAC three years ago..paying monthly. The local bank asked if they would subordinate..they said no. The local bank is asking their underwriting if they could pay off second utility loan with the new equity line...in effect the 50K equity loan..which I qualify..would have an initial 6K draw..I don’t see why they wouldn’t..we will see. If they will not, could I use my own funds...which I don’t want to..but could I use my own funds...pay of 6K utility loan...the local bank gives the equity line...I make repairs/upgrades...sell/exchange..and take 6K from net proceeds and be responsible for just that about of boot? The exchange would still be ok..under the parameters you previously explained? If so what would be taxable gain on the 6K boot? Thanks again for your time and experienced advice Dave. dan
  

Hi, I own a rental property...single family residence. I have owned since 2003. I understand when I use an exchange company to facilitate sale/exchange,  when property is sold the first mortgage is paid. I have an equity line on the property I attained to make repairs/upgrades to enhance the sale proceeds. Can the exchange facilitator also pay off the equity line on sale? So the net proceeds, to apply toward new exchanged property loan, will be the result of paying off first and equity line..and still be fully considered a 1031 exchange with no tax consequence from paying off both loans? All cash from equity line was used in the rental. Thanks for answering. I appreciate the time. dan