[WSBARP] purchase of encumbered real property - income tax basis
Kary Krismer
Krismer at comcast.net
Thu Oct 10 13:36:50 PDT 2019
Would it be correct to assume that any interest accrued and/or paid on
the underlying "subject to" debt would be deductible as an interest
expense (for an business/investor taxpayer)?
Kary L. Krismer
John L. Scott, Inc.
206 723-2148
On 10/10/2019 1:30 PM, Craig Gourley wrote:
>
> Basis is cash plus assumed debt plus improvements. Gain or loss is
> based on Selling price minus closing costs and minus basis. The debt
> is not relevant when it is paid off because it was accounted for at
> the time the property was acquired. For example paying off the loan
> before you sell has no tax implication at all. Same if it is paid off
> at closing. Give me a call if you have ancillary questions. Thanks,
> Craig
>
> *Gourley Law Group*
>
> *Snohomish Escrow*
>
> *The Exchange Connection*
>
> **
>
> 1002 10^th Street / PO Box 1091
>
> Snohomish, WA 98291
>
> 360.568.5065
>
> 360.568.8092 fax
>
> _Craig at glgmail.com <mailto:Craig at glgmail.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>
>
> NOTICE: The information contained in this electronic information
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