Discussion:Property basis with 1031 exchange
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Discussion Forum Index --> Tax Questions --> Property basis with 1031 exchange
| 25 February 2007 | |
| In 2005 my client had a 1031 exchange for rental property. They did not use all of the sale proceeds for the new property. They had a $581,898 gain and the purchase price of the new property was $463,610. In 2005 a gain of $368,890 was reported and $213,008 was deferred. When I file the 2006 return do I use the purchase price of $463,610 for reporting depreciation or do I use $250,602 which would be the purchase price less the deferred gain. It seems to me if I use the reduced basis price they are missing out on the depreciation expense. Thank you. | |
| 25 February 2007 | |
| The basis of the new property should be the same as the basis of the old property ($250,602). You can't claim basis attributable to a gain that was not recognized. In addition, you can't claim basis that was attributable to the recognized gain since the recognized gain was all attributable to boot received. | |
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