Tax & 1031 Strategy · 7 Min Read · Stephen R. Mannenbach, J.D., MBA · Loan Daddy LLC

IRC § 1031 Exchange Debt-Replacement & DSCR Financing: Eliminating Mortgage Boot

Bottom Line Up Front (Quick Answer):To achieve 100% tax deferral in an IRC § 1031 exchange, you must (1) reinvest 100% of net cash proceeds held by your Qualified Intermediary (QI) and (2) replace equal or greater mortgage debt on the replacement property(ies) within the strict 45-day identification and 180-day closing deadlines.
Open 1031 Exchange Debt-Replacement Desk →Price Scenario Across 45+ Shelves

Using DSCR Loans to Close 1031 Replacement Properties in 10–14 Business Days

Because DSCR underwriting does not wait on CPA tax return transcripts or global debt-to-income calculations, investors can lock replacement debt and close well inside the 180-day IRS statutory window.

Frequently Asked Questions

Can I form a new LLC to take title to my 1031 replacement property?

Yes, provided the new LLC is a single-member disregarded entity owned by the exact same taxpayer that relinquished the sold property.

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IRC § 1031 Exchange Debt-Replacement & DSCR Financing: Eliminating Mortgage Boot | Stephen R. Mannenbach, J.D., MBA · Loan Daddy LLC | Stephen Mannenbach