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<p class="MsoNormal">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
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><b><span style="font-size:14.0pt">Gourley Law Group<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">Snohomish Escrow<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt">The Exchange Connection<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:14.0pt"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif">1002 10<sup>th</sup> Street / PO Box 1091<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif">Snohomish, WA 98291<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif">360.568.5065<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif">360.568.8092 fax<o:p></o:p></span></p>
<p class="MsoNormal"><u><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#0563C1"><a href="mailto:Craig@glgmail.com">Craig@glgmail.com</a></span></u><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-family:"Times New Roman",serif"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:red">Be Aware! Online banking fraud is on the rise. If you receive an email containing
<b>Wire transfer instructions </b>call us immediately to verify the information prior to sending any funds!<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:8.0pt;font-family:"Arial",sans-serif;color:blue">CONFIDENTIALITY NOTICE: This electronic mail transmission may contain legally privileged, confidential information belonging to the sender. The information is intended
only for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or taking any action based on the contents of this electronic mail is strictly prohibited. If
you have received this electronic mail in error, please contact sender and delete all copies</span><span style="font-size:8.0pt"><o:p></o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbarp-bounces@lists.wsbarppt.com <wsbarp-bounces@lists.wsbarppt.com>
<b>On Behalf Of </b>Rod Harmon<br>
<b>Sent:</b> Thursday, October 10, 2019 12:12 PM<br>
<b>To:</b> WSBA Real Property Listserv <wsbarp@lists.wsbarppt.com><br>
<b>Subject:</b> [WSBARP] purchase of encumbered real property - income tax basis<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">This is one of those tax questions I ought to know the answer to, but I don’t.
<o:p></o:p></p>
<p class="MsoNormal">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?
<o:p></o:p></p>
<p class="MsoNormal">Cash paid to seller plus balance due on mortgage at time of purchase?<o:p></o:p></p>
<p class="MsoNormal">Cash paid to seller? <o:p></o:p></p>
<p class="MsoNormal">If the latter, how does client account for the mortgage when he pays it off upon sale?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:13.0pt;font-family:"Arial",sans-serif;color:#1F497D">Rod Harmon</span><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-size:13.0pt;font-family:"Arial",sans-serif;color:#1F497D"> </span></b><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-size:13.0pt;font-family:"Arial",sans-serif;color:#1F497D">RODNEY T. HARMON</span></b><o:p></o:p></p>
<p class="MsoNormal"><b><span style="font-family:"Arial",sans-serif;color:#1F497D"> Attorney at Law</span></b><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> P.O. Box 1066</span><span style="color:#1F497D"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> Bothell, WA 98041</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> Tel: (425) 402-7800</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> Fax: (425) 458-9096</span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> <a href="http://www.rodharmon.com">www.rodharmon.com</a></span><o:p></o:p></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"> <a href="mailto:rodharmon@msn.com">rodharmon@msn.com</a></span><o:p></o:p></p>
<p class="MsoNormal" style="margin-top:6.0pt"><o:p> </o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">
wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Rick Hoss<br>
<b>Sent:</b> Thursday, October 10, 2019 9:32 AM<br>
<b>To:</b> 'WSBA Real Property Listserv' <<a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBARP] Affirmative Defenses to Fraud and/or Negligent Misrepresentation<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D">Hi Cat.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D">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).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D">Restatement (Second) of Torts, Sec. 552A; ESCA Corp v. KPGM Peat Marwick, 135 Wash.2d 820, 826 (1998).<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D">Rick<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Times New Roman",serif;color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">
wsbarp-bounces@lists.wsbarppt.com</a> <<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a>>
<b>On Behalf Of </b>Catherine Clark<br>
<b>Sent:</b> Wednesday, October 09, 2019 1:09 PM<br>
<b>To:</b> WSBA Real Property Listserv <<a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a>><br>
<b>Subject:</b> [WSBARP] Affirmative Defenses to Fraud and/or Negligent Misrepresentation<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">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?<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">While I’ve been at this game “a while,” I haven’t seen that before. Perhaps one of you has. Your thoughts appreciated.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Thanks.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Catherine “Cat” Clark<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Law Office of Catherine C. Clark PLLC<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">2200 Sixth Avenue, Suite 1250<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Seattle, WA 98121<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Phone: (206) 838-2528<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Cell: (206) 409-8938<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Fax: (206) 374-3003<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">Email:
<a href="mailto:cat@loccc.com">cat@loccc.com</a><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.5pt;font-family:"Copperplate Gothic Light",sans-serif;color:#1F497D">NOTICE: The information contained in this electronic information transmission is confidential. If you are not the intended recipient, or the
employee or agent responsible for delivering it to the intended recipient, you are hereby notified that any use, dissemination, distribution or copying of this communication is prohibited. If you received this communication in error, please immediately notify
the sender by telephone at (206) 838-2528. Thank you.<o:p></o:p></span></p>
<p class="MsoNormal"><o:p> </o:p></p>
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