[WSBARP] purchase of encumbered real property - income tax basis

[Inger Brockman]

Basis = Cash plus Assumed (underlying) Mortgage

https://www.irs.gov/publications/p551#en_US_201812_publink1000256913

Real estate excise tax is also calculated on the sum of cash and underlying debt.

Inger Brockman | Attorney | Montgomery Purdue Blankinship & Austin PLLC
701 Fifth Avenue, Suite 5500, Seattle, WA 98104  (206) 682-7090  Fax (206) 625-9534
brockman at mpba.com<mailto:brockman at mpba.com> www.mpba.com<http://www.mpba.com/>

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Rod Harmon
Sent: Thursday, October 10, 2019 12:12 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] purchase of encumbered real property - income tax basis

This is one of those tax questions I ought to know the answer to, but I don't.
House-flipping client buys real property, paying the seller cash and taking the property encumbered by a mortgage.  What is his basis for income tax purposes?
Cash paid to seller plus balance due on mortgage at time of purchase?
Cash paid to seller?
If the latter, how does client account for the mortgage when he pays it off upon sale?

Rod Harmon

RODNEY T. HARMON
       Attorney at Law
         P.O. Box 1066
      Bothell, WA   98041
     Tel:   (425) 402-7800
     Fax:  (425) 458-9096
    www.rodharmon.com<http://www.rodharmon.com>
   rodharmon at msn.com<mailto:rodharmon at msn.com>





From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rick Hoss
Sent: Thursday, October 10, 2019 9:32 AM
To: 'WSBA Real Property Listserv' <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: Re: [WSBARP] Affirmative Defenses to Fraud and/or Negligent Misrepresentation

Hi Cat.
In neg misrep, the plaintiff must prove justifiable reliance. If a party to a contract is negligent to ascertain the truth of the other party's representations, that party's own negligence is a complete defense to the claim. See Condor Enterprises v. Boise Cascade, 71 Wash.App. 48, 53 (1993).
Restatement (Second) of Torts, Sec. 552A;  ESCA Corp v. KPGM Peat Marwick, 135 Wash.2d 820, 826 (1998).
Rick


From: wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com> <wsbarp-bounces at lists.wsbarppt.com<mailto:wsbarp-bounces at lists.wsbarppt.com>> On Behalf Of Catherine Clark
Sent: Wednesday, October 09, 2019 1:09 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com<mailto:wsbarp at lists.wsbarppt.com>>
Subject: [WSBARP] Affirmative Defenses to Fraud and/or Negligent Misrepresentation

Has anyone faced an "assumption of the risk" and "contributory negligence and/or comparative fault" affirmative defense when claiming fraud/negligent misrepresentation around a real estate transaction?

While I've been at this game "a while," I haven't seen that before.  Perhaps one of you has.  Your thoughts appreciated.

Thanks.

Catherine "Cat" Clark
Law Office of Catherine C. Clark PLLC
2200 Sixth Avenue, Suite 1250
Seattle, WA 98121
Phone:  (206) 838-2528
Cell:  (206) 409-8938
Fax: (206) 374-3003
Email:  cat at loccc.com<mailto:cat at loccc.com>

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