"If I buy more than one new property, are there rules on how I have to split the cash and the debt?"

No, as long as you buy equal or up, and reinvest all the cash, you can split the cash and the debt however you wish. For example, if you sold your Old Property for $100,000 and $60,000 went to your qualified intermediary (after paying the mortgage and closing costs of $40,000), in order to avoid paying tax you would have to buy properties totaling at least $100,000 and you would have to spend the $60,000.

If, for example, you were buying two replacement properties for $50,000 each, you could purchase the first one for cash, and could purchase the second one using the remaining $10,000 that the intermediary is holding and getting a loan for the $40,000 balance.

--The Experts

TEE-Shots are Tips from the Exchange Experts that are designed to make you think about, and ask questions about, the 1031 exchange process.