@AmyC Following up. I split the "new basis" (calculated on Form 8824) for the replacement properties equally based on the percentage to the total price. From a strategy pov, if this is not required, then it occurs to me that you could carry forward as much of the gain as possible in one property that you plan to keep forever, such as a new rental that you plan to move into some day in the future.
BTW, the standard "rule" that you defer the gain if you move up in SP and debt seems flawed to me. If you move up in SP and take "too much" new debt then you will receive cash (boot) and pay capitol gains tax which really turns the exchange into a partial exchange. Note: Form 8824 takes the new debt - old debt and adds that amount to the "adjusted basis", but what if you put a bunch of cash into the property in place of new debt? I'll have to look again but it seems like 8824 should have an entry for "cash into the exchange".
Thanks,
Victor
