If the second property is subsequently sold for $173,500 is the 170,000 free of gain and the 3,500 still exchange money to be moved into another 1031 or taxed at its original basis? Or has the 170,000 been diluted by its use in the second transaction?
Seems - if so, then it would have been better to pay the gain tax on the 3,500 rather than dilute the 170,000.
Thoughts and/or comments. I am in a similar situation.
