1031 MORTGAGE

IN A 1031 EXCHANGE DO WE INCLUDE THE OLD MORTGAGE BALANCE (PAID OFF) AND NEW MORTGAGE TAKEN OUT FOR THE CALCULATION OF THE BASIS OF THE LIKE KIND PROPERTY RECEIVED.

It depends.
Depends if all the debt was replaced or not and if there was boot or additional money invested.
New basis = old basis - boot received + gain recognized.

It depends.
Depends if all the debt was replaced or not and if there was boot or additional money invested.
New basis = old basis - boot received + gain recognized.

Yes the client paid off mortgage on property sold and took out a new mortgage on the property purchased.

Yes, net debt is used to calculate new basis but it is only 1 piece of the basis equation. Debt AND equity have to be replaced or there will (likely) be boot. Boot out reduces basis; then recognized boot gain increases basis.

What are the FMV's of the properties and the debt before/after?

Yes, net debt is used to calculate new basis but it is only 1 piece of the basis equation. Debt AND equity have to be replaced or there will (likely) be boot. Boot out reduces basis; then recognized boot gain increases basis.

What are the FMV's of the properties and the debt before/after?

Adjusted Basis of Old Property:180K
FMV of Old Property: 355K
FMV of Like Kind Property: 599K
Old Debt:136K
New Loan: 479K

Please confirm that you are recognizing $99K of boot. $219K cash coming out of the sale less $120K cash going into purchase.

If so, basis = $180K + $99K.

Put post #5 numbers in CFS tax tools.

New basis =$523K. (Detail $180K original basis + $479K new loan + $99K recognized gain less $99K boot less $136K old loan=$523K)

So new basis is old basis $180K plus increase in liabilities ($479K-$136K).

Duh. Of course! Thank you for the correction. I was focused only on that boot.

Put post #5 numbers in CFS tax tools.

New basis =$523K. (Detail $180K original basis + $479K new loan + $99K recognized gain less $99K boot less $136K old loan=$523K)

So new basis is old basis $180K plus increase in liabilities ($479K-$136K).

Yes that's the number i come up with. Thank you.