After closing on the replacement property in a 1031 exchange, the new owner often times wished to refinance that property and cash out. The question is, how soon after the closing can one do such? the short answer is in one nanosecond. There is no cut and dry rule regarding the time period. Obviously, the longer the time period the better. To avoid the step transaction rule being applied and having monies taken out treated as “boot” (taxable income), a justified business purpose ( such as lower interest rates)should be documented.The additional monies taken out can easily be justified if the mortgage payment remains the same.