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

Thu Oct 10 12:44:40 PDT 2019

Add closing costs (real estate excise tax if any for the buyer, escrow fee,
inspection costs, etc.), right?

                Steve

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com>
On Behalf Of Inger Brockman
Sent: Thursday, October 10, 2019 12:40 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] purchase of encumbered real property - income tax
basis

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
 <mailto:brockman at mpba.com> brockman at mpba.com  <http://www.mpba.com/>
www.mpba.com 

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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 Rod Harmon
Sent: Thursday, October 10, 2019 12:12 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com
<mailto: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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