All Forum Posts by: Jason Teague

Thank you, Mr. Foster.

Well Frank,

Maybe you shouldn't try to answer questions you don't know the answer to.  I'm not asking anyone to spend all afternoon on it with me, just to simply answer my three clear questions, which you were unable to do.  Not complaining about people referring one another to a CPA, just pointing out that by doing so, you just dodge the issue of you personally not knowing the answer.

Frank Chin,

Thanks for the response.  I calculated the accumulated depreciation (recapture), closing costs, capital improvements, original cash outlay, etc to arrive at current tax basis and to the rough net gain of $50,000.

For the sake of understanding the specific question regarding the cash boot, let's assume my net gain estimate of $50,000 is correct.

I have engaged a QI for this exchange and they won't provide any guidance outside of "contact a CPA" which is everyone's favorite answer.  

Regarding your statement that "you should not lay your hands on any of the money at all, so the QI would not be cutting you a check", let me ask you this:  what happens to the funds if you fail to id a property in 45 days or close within 180 days, or fail to use all the proceeds from the sale, but do use a portion of the proceeds from the sale on replacement property?  It will be returned to me at that point, yes?  And possibly taxed as capital gains depending on the answers to my original questions.   

Thanks.

I have a tax basis of $150,000 on a rental property that I am selling. I am under contract to sell the property for $215,000, of which after closing, I will realized $200,000.  I have no debt on the property, I own it free and clear.

Question 1:  Am I wrong to assume that I am facing $50,000 in capital gains taxes? $200,000 net from sale - $150,000 tax basis =  $50,000 gain

Question 2:  (Mortgage Boot) Even though I have no debt on the property, do I still need to acquire a replacement property greater than $215,000 (the sale price) or do I only need to acquire a property >/= my net gain of $50,000 to avoid the mortgage boot?

Question 3:  (Cash Boot)  If I finance the new property and put only the $50,000 down via the 1031 exchange and the qualified intermediary then cuts me a check for the remaining $150000, have I avoided the cash boot on the $150,000 because I'm only responsible for the $50,000k in net gains or do I have to put the whole $200000 down on the new property valued >/= $215,000 to avoid the cash boot?

Thank you thank you thank you in advance.