: Re-leveraging an investment property vs 1031 reverse exchange Is it shady / an issue or typical and accepted to refinance a property to the max just before selling it and performing a 1031 exchange? Is this considered a taxable

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Re-leveraging an investment property vs 1031 reverse exchange
Is it shady / an issue or typical and accepted to refinance a property to the max just before selling it and performing a 1031 exchange? Is this considered a taxable event (have to pay taxes on the money financed out)?

The reason for the question, is that I wish to perform construction on the newly purchased exchange property. This involves a complex process called a "Reverse Exchange". It is expensive (around k - k dollars) and a lot of banks aren't familiar with it / won't finance it.

What is a reverse 1031?: www.biggerpockets.com/blog/reverse-1031-exchange-real-estate
Simple Summary: Requires forming an EAT (Exchange Accommodation Titleholder). This is a temporary firm where money is parked (from a sale) until construction on an exchanged property is complete at which point the property is sold back into the exchanger's name.

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