Legal Question in Real Estate Law in Virginia

1031 Exchange
We currently have a rental property that has a 1st loan, a home equity loan and a home equity line, all with balances. We want to sell and get a like property through a 1031 exchange. In order to stay within the guidelines of the 1031 exchange rules, are we able to pay off all 3 liens with the sale without violating the 1031 exchange guidelines? If so, if there are no funds remaining from the sale because of the payoff of the liens and the decline of home sales, can we still get a like property via a 1035 exchange?

Asked on 1/01/08, 10:12 am

Michael Hendrickson Law Office Michael E. Hendrickson

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Re: 1031 Exchange

As I understand the IRS rules governing so-called 1031(Starker) exchanges, you could pay off the liens

and still qualify for a like kind exchange property. I would recommend, however, that you seek a second opinion on the matter.

Answered on 1/02/08, 11:11 am

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