All Forum Posts by: Kevin Kershisnik

Thanks very much for the reply Wayne. The problem I have is there is a good chance the certificate of occupancy won’t be issued in the 180 day time period. I may have to go under contract and purchase the property before the certificate of occupancy is issued and it is my understanding that banks won’t lend on an uncompleted project.  So then I’d have to pay cash without a loan.  Don’t 1031 exchanges require not only that the replacement property cost as much as the sold asset AND the loan be as much as the loan on the sold asset?  If that’s the case, then I would be in violation of the 1031 exchange rules, no?

So I’m in a bit of a predicament. We are selling an existing rental property and want to do a 1031 exchange to avoid the tax consequences. One property that we are looking at to invest in as part of the 1031 exchange may not be certified for occupancy within the 180 day timeframe. That means we may have to pay cash for it for which we will take out a mortgage after the property is completed. The problem is it will have to be an all cash deal at first since nobody will lend on an incomplete property, but there is currently a loan on the property being sold. Can I pay off the loan on the sale of the current property before escrow closes so that I avoid having to take out a loan on the new property?