1031 Exchange (financing)

[ILLMAS]

I have never encounter where a TP is short on money to acquire a new property and wanted to see if I am determining the basis correctly:

Property given up

Property A - Was sold for $150K and the basis (basis of new property received) of this property was $25K, no mortgage fully paid (After closing cost etc... $138K was wired to the 1031 holding company)

Property B - Was sold for $300K and the basis (same as above) of this property was $66K, no mortgage fully paid (After closing cost etc... $285K was wired to the 1031 holding company)

In short property A basis is $25K and property B is $66K totaling $91K, these two properties were sold to obtain property C.

Property received

Property C - Was bought for $700K and proceeds from the sale of property A & B was wired from the 1031 holding company to the title company leaving a remaining balance of $277K.

I already know at minimum the basis of the new property received is  $25K + 66K = $91K, but from the instruction I need to add debt acquire of $277K, so my new basis should be $368K?

I have also prepared two forms 8824 and wanted to see if I need to divide the $700K evenly with the two forms or it makes no differences how I distribute it just as long as the new basis matches?

Thanks

 

MAS

[DANRVAN]

It sound like your numbers are correct. 

On 11/1/2019 at 2:20 PM, ILLMAS said:

have also prepared two forms 8824 and wanted to see if I need to divide the $700K evenly with the two forms or it makes no differences how I distribute it just as long as the new basis matches?

When an exchange involves multiple properties you report it on a single form 8824. (see instructions).  You leave lines 12-18 blank and attach a worksheet to show how you arrived at those individual amounts and the net is reported on lines 19-25. An excel spreadsheet works great when multiple properties are involved.