1031

[DTS]

Something does not look right to me with this exchange. Would someone take a look and let me know if I'm on the right track or not?

Old property:
Basis - $100,000 + 11,124 exchange costs = $111,124 (no mortgage)
Sold for $325,000

Replacement property:
Cost - $519,000 + 5,638 closing costs = $524,638
New mortgage - $194,000

I'm coming up with a deferred gain of $188,514 and basis of new property of $336,124.

Does this look correct and is this new basis ($336,124), the new basis for depreciation?

Thank you, Dennis

[Bird Legs]

1031

CFS TaxTools has a calculator just for this situation.

[jainen]

in the right place

The main thing I see wrong is the mention of a mortgage in the first and last lines. Mortgage is completely, totally, unredeemably irrelevant.

I also don't much like the math. When I subtract 111 from 325 I don't get 188. But in the end our numbers are close. My quick-calc of the new basis is 310,762.

I really appreciate you not using the words "sold" or "bought" anywhere. It's one of my personal prejudices, and I see your heart is in the right place.

[Unregistered]

1031

The main thing I see wrong is the mention of a mortgage in the first and last lines. Mortgage is completely, totally, unredeemably irrelevant.

Mortgage and cash are unlike property: so you must figure mortgage give up and received when doing your 1031 calculation.

I come up with a base closer to $310,762
Deferred gain of $213,876

[jainen]

the mortgage is irrelevant

>>Mortgage and cash are unlike property<<

No, the mortgage is irrelevant. In the old days a buyer might assume a mortgage, but nowadays lenders always enforce the due-on-sale clause. The exchangor does not give up a mortgage, he pays it off. And he doesn't receive a mortgage, he signs up for a new one.

[DTS]

1031

Thank you all for your help.

I went into CFS and redid the numbers and came up with the same totals you all did.

Thanks, again.
Dennis