1031 exchange and new mortgage amount

Quick question. My understanding from reading the 1031x literature is that the new mortgage on the replacement property has to be the same or larger than the amount of the mortgage left on the existing property. For example, our original mortgage was $220,000 and the balance as of today is $177,000. The mortgage on the replacement property has to be $177,000 or larger. Is that correct?

Thanks,P

Dear P:  To fully defer taxes in a 1031 exchange you must trade equal or up in value AND equal or up in equity.  As a practical matter that often means that you are also trading equal or up in mortgage amount.  However, the IRS always allows the taxpayer to add cash into the exchange and reduce the amount of mortgage.  I hope you will choose 1031x,com for your next exchange.  Sincerely,

Steve Hickox
Attorney / President