Can you buy multiple properties to complete a 1031 exchange? Yes, provided you identify all the properties you are going to purchase. You have to designate them within 45 days after the closing of your relinquished property. They have to be clearly described. If you do that you can cobble together multiple properties to get to the requisite value that you need to attain from an accounting perspective to defer your gains.
Let’s say you sold a property for $500,000 and you identified three replacement properties each worth $250,000 for a total of $750,000 in replacement properties. You can spread your equity over those properties any way you want so long as you reinvest all of your equity into those three properties. What a lot of people do is they put a lot of cash down on one of those three properties and put the minimum down on each of the other two because if they ever need to refinance or draw out some equity, they want to have all of their cash consolidated in one target property. That way when they refinance their property they don’t have to encumber the other two.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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