Can you use a 1031 exchange to buy property of lesser sales price if you get a construction loan and plan to do major projects?

By | March 8th, 2019|Comments Off on Can you use a 1031 exchange to buy property of lesser sales price if you get a construction loan and plan to do major projects?
QuestionsCategory: 1031 exchangeCan you use a 1031 exchange to buy property of lesser sales price if you get a construction loan and plan to do major projects?
1 Answers
Xchange Expert Staff answered 2 years ago

Yes, you can do a 1031 exchange to buy a property of lesser price.
     Suppose you sell the property and find the replacement property of lesser value. All you need to do is to involve the qualified intermediary in the process to handle the proceeds and do the constructions work. In this case, the investor lends the money and gives it to the qualified intermediary for the construction work. The QI completes the construction work within 180 days.
          Here, the qualified intermediary acts as an Exchange Accommodation Titleholder (EAT).

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