What is a 1031, what benefits?

My wife and I have two investment properties which we rent out. I’ve heard something about a 1031 which allows us to borrow against these properties, thus providing a financing source for other deals. How does this work and what are the pro’s/con’s about using a 1031?

Howdy Enricosuave:

A 1031 is a tax deferred trade where you sell a property and buy another like kind property of equal or greater equity and loan balance. You can defer the gain on the sale until you sell or trade the new property. It has nothing to do with financing at all. Somehow someone got confused.

You can borrow against your rental properties provided you have equity. There are many mortgage brokers, bankers and loan officers that are members of the forums


I see. I was thinking that a 1031 was a type of loan against existing property… not the sale of the property. (We want to keep our existing rentals, not sell them.)