1. Basis: The adjusted cost basis in the property being relinquished (with improvements) is $125,000 (cash buy price) + $716 escrow fees, and $16,252 has been taken in depreciation over about a 12-year period.
2. Relinquished Property: The relinquished property contract price is $539,000 with no debt to pay off at settlement. Exchange expenses are $27,280 and proceeds in the amount of $510,619 are placed in a qualified escrow account by the qualified intermediary.
3. Replacement Property: The replacement property was purchased for $530,000 using all available funds from the exchange escrow account (less intermediary account fee) of $509,370. The remaining balance difference being made with cash payment. Exchange expenses were $2,140.
Hi, I am currently stuck on Line L of the Summary Smart Worksheet. It’s throwing an error on Line L ‘Cash received’, stating ‘cash rep’d must be no less than the difference between the total value of items given up($539,00) and total value of non-cash items received($530,000). I think the software is trying to say that the replacement property must be equal or greater according to the 1031 exchange rules. Should I factor in the selling fees and revise the FMV of the like-kind property given up (Line G) to $510,619?
Please advise and thanks in advance!
Reference Instructions used:
