#1 They fail to get “replacement” debt. All Exchangers understand that to get a complete tax deferral they need to reinvest the cash from the sale into the replacement property. Few Exchangers know they also have to “reinvest” their debt. For example, if they sell a property and pay off a mortgage of $75,000, they must acquire replacement property also encumbered by a mortgage of at least $75,000.
#2 They think if they sell a duplex they have to buy a duplex. Not true! This is the best news! In exchanges of real property, all real property is considered “like-kind” with all other real property.