I must admit that I don't see many of these RE exchanges, so pardon me if this is very basic. A client's RE sale will include some cash-out plus payoff of an existing mortgage balance. I believe that the payoff of the mortgage at closing would be included in the taxable boot along with the actual cash received at closing. The client disagrees, of course, and wants to include that amount in closing costs. I don't blame him, as it is a significant amount. I have not seen anything in the instructions to the exchange form, probably too basic an issue. Thanks in advance!
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John -
You're probably right. Did he take a mortgage on the new property? That would reduce the amount of boot from the mortgage payoff.
https://1031x.com/like-kind-exchange-boot/ has examples that you may find useful"Taxation is the price we pay for failing to build a civilized society." ~ Mark Skousen
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