1031 Tax Exchanges. You do not NEED to make a purchase @ or above your associated properties sale pr
I asked this question to one of the cities top 1031 actuaries.
"Does a buyer need to make a purchase equal or greater to the price of their connected sales in order to complete a 1031 exchange"?
The answer was
"Brian, in order to defer all of the capital gains from the sale of Relinquished Property, the exchanger must buy equal to or greater than the sales price of the Relinquished Property and use all of the exchange funds for the purchase of the Replacement Property. However, if the exchanger buys down (i.e. less than the sales price of the Relinquished Property), then they can still do the exchange, but they will not be able to defer all of the capital gains. A portion of the capital gains would be taxable to them in the tax year in which the exchanger sold the Relinquished Property. As to the amount that is taxable, that is really an accounting question better left to their accountant to advise them. But to answer your question, yes, they can still do the exchange."