leverage and real estate

Hi Steve,

We are trying to figure to where to have a mortgage and realize that we need
to know the answer to this question.

How much has to be reinvested on a 1031 x?  Is it the net proceeds or the
gross proceeds of the sale.  Is it advantageous to have a mortgage on the
investment property?

We are trying to figure out where to hold a mortgage.

Thanks for your help.

Dear L:  The general rule under section 1031 is: to defer ALL income tax liability you must trade equal or up in VALUE minus the transaction costs of selling your property.   With regard to your question about mortgages: You are trying to buy a property that goes up in value.  If the property goes on in value (including any income produced by the property) at a rate  higher than the interest rate on the mortgage then the mortgage will make the investment even better.  I, generally, believe than higher mortgage amounts make for better real estate investments.  Let me know if you need more.  Sincerely,

Steve Hickox
Attorney / President

1031x.com has grown to provide many services to our clients as Castle United!
Click here:  http://www.CastleUnited.com/

1031x.com, Inc.
2120 S. Birch St.
Denver, CO 80222
303.504.0144
Toll Free 888.899.1031
Fax 303.715.1012

infox@1031xcastle.com