Basis on 1035 Exchange

[Brian EA]

Client exchanged Rental Property
Original basis $35000. fully depreciated

new rental house cost $200,000.
What would be the basis for depreciation?

I think it should be $165000.
Need to confirm.

thanks

brian

[Bird Legs]

1031 exchange

Did your client pay any boot on this transaction?
If not, then the basis is zero since his previiously owned property was fully depreciated.
In CFS Tax Tools there is a worksheet to calculate basis on an exchange.

[Brian EA]

[QUOTE=Bird Legs;33170]Did your client pay any boot on this transaction?
If not, then the basis is zero since his previiously owned property was fully depreciated.

He sold for 175k and took a small mtg for 25k

brian.

[Bird Legs]

I am Confused

Brian, in this last post you stated that client sold property for $175000.
In the original post you stated client exchanged property, 1031 exchange.
My question, did client sell or exchange?
And if it was an exchange did they go through an intermediator?

[Brian EA]

Sorry Bird

My client sold / exchanged his rental condo for another rental condo.The exchange was completed in june 2006. It was a 1035 exchange. His basis in the original condo was $35000. It was appraised for $175000. The condo he got in exchange was appraised for $200000. He took out a mtg for $25000.

The big question is. What basis should he use for depreciation

thanks
brian

[Bird Legs]

Basis-1031 Exchange

Basis will be $25,000.

... ....................................... Property Given Up ......... Property Received
Cost of property given up ........... $35,000.
Depreciation allowed ............ (35,000.)
Adjusted Basis ..................... -0-
FMV of Property Given Up ........ 175,000.

FMV of Property Received ........................................ $ 200,000.
Less Liability Received .......................................... ( 25,000.)

Realized Gain .................................................. ..... $175,000.

Recognized Gain .................................................. ... -0-

Mortgage Received ............................................... $ 25,000.

Basis of like kind property received .......................... $ 25,000.

[veritas]

Client exchanged Rental Property
Original basis $35000. fully depreciated

new rental house cost $200,000.
What would be the basis for depreciation?

I think it should be $165000.
Need to confirm.

thanks

brian

Brian, 1035 exchange is the code section dealing with life insurance/annuities exchanges.

You are dealing with a 1031 exchange if it was done properly.

[Brian EA]

Brian, 1035 exchange is the code section dealing with life insurance/annuities exchanges.

You are dealing with a 1031 exchange if it was done properly.

Thanks ,I meant 1031 exchange.
my apologies

brian