The Book on Advanced Tax Strategies by amanda Han

Author:amanda Han
Language: eng
Format: epub
Publisher: BiggerPockets Publishing
Published: 2020-04-15T00:00:00+00:00

$300,000

Original Purchase Price

($50,000)

Less: Accumulated Depreciation

$250,000

Adjusted Tax Basis on the Date of the Sale

$500,000

Sales Price

($35,000)

Less: Selling Costs

($250,000)

Less: Adjusted Tax Basis

$215,000

Gain on Sale of the Property

Based on a discussion with his CPA, Anthony decided to pursue a 1031 exchange to defer his taxes. This seemed to be a good strategy because he was planning to reinvest the money into additional investment properties anyway. After looking at several properties, he purchased Property #2 as his replacement property. The final purchase price of Property #2, agreed upon between Anthony and the seller, was $495,000. His total purchase costs were $25,000, and the mortgage he took out on the property is $295,000. In this scenario, did Anthony meet his monetary requirements for 1031 exchange purposes? Let’s take a look.

First, let’s go through the numbers to see if Anthony met the purchase price target for his replacement property:

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