joans Posted April 10, 2008 Report Posted April 10, 2008 I have a client who purchased a building but with the loan came a repayment of a previous loan. What is the cost of this? The original purchase price of the building or the building and repayment of loan? Brain has quit working long time ago. Quote
schirallicpa Posted April 10, 2008 Report Posted April 10, 2008 yes - the other loan was part of his cost. Quote
jainen Posted April 10, 2008 Report Posted April 10, 2008 >>with the loan came a repayment of a previous loan<< If he took title "subject to" an existing loan, they might have written it up in various ways. Most likely the payment to the seller would be reduced by the amount of liability, but the basis to the buyer is still FMV. If you mean that he used the new equity to cover a prior debt of his own for an unrelated matter, the new basis is still the FMV and you must allocate the interest expense according to the use of the proceeds. Quote
joans Posted April 10, 2008 Author Report Posted April 10, 2008 THANKS FOR THE HELP!! THINKING IS STARTING TO HURT TOO MUCH! Quote
Ray in Ohio Posted April 10, 2008 Report Posted April 10, 2008 THANKS FOR THE HELP!! THINKING IS STARTING TO HURT TOO MUCH! starting to hurt?? I don't remember ever being as burned out as I am this year. Roses are red, violets are purple. Sugar is sweet, and so is maple syruple. Quote
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