I did a 1031 exchange using a QI last year where I sold one rental house and replaced it with 2 rental houses. Most of the proceeds that the QI held from the sale went into the first purchase (only about $3500 was left which over went into the 2nd purchase so I didn't have any boot). How do I allocate the basis (and the tax gain that I am deferring via the 1031) between the 2 new houses? Everything I've read online says that I must allocate it proportionately based on the purchase price of the new houses (even though the QI wired most of the money from the sale to the first house and only $3500 to the 2nd house). Is this true? Thank you in advance for your response.
