I refinanced a property to purchase another property, can I use the IRS 1031 exchange program?
I live in Arkansas.
Answers:
No, that with the sole purpose works if you get rid of one property and buy a similar property as a replacement, not borrowing on one property to buy another. And in any overnight case, why would you inevitability to use a 1031 exchange? You haven't sold anything.
There is no wealth gain to defer in your example so no you should not use IRC 1031. Refinancing a property is not a taxable event.
You took bread from the equity within one property to purchase another property. There be no exchange of property, so Section 1031 does not apply to you.
The further interest you are paying on the first property will be deductible as a business expense if the first property is a business property.
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Answers:
No, that with the sole purpose works if you get rid of one property and buy a similar property as a replacement, not borrowing on one property to buy another. And in any overnight case, why would you inevitability to use a 1031 exchange? You haven't sold anything.
There is no wealth gain to defer in your example so no you should not use IRC 1031. Refinancing a property is not a taxable event.
You took bread from the equity within one property to purchase another property. There be no exchange of property, so Section 1031 does not apply to you.
The further interest you are paying on the first property will be deductible as a business expense if the first property is a business property.