Assignment Fee In Cost Basis?
I paid an assignment of contract fee as part of the purchase of a beach condo last year. It this fee now part of the basis or do I expense this fee in my investment property business tax return?
The assignment fee is included in your purchase price, and therefore, included in your cost basis.
In this case, the assignment fee was not included on the HUD-1. The assignment fee was paid completely outside the closing. To be conservative, I decided to put this cost into the basis rather than expencing it (as a cost of acquisition). Thanks for the replies thus far.
Whether or not an item shows up in the HUD-1 is not what determines if it is expensed or capitalized. It is the nature of the item itself. My appraisal costs for a 1031 were done completely outside of the escrow, yet this is clearly a capital item. The assignment fee is not an operating expense for the beach condo and should be part of the basis to be amortized.[ Edited by edmeyer on Date 10/29/2007 ]
Short answer: NO.
Must EXCHANGE your property into new property, in order to qualify for tax Deferrment. There is a lot more, but that is the Basic.
not the answer I was hoping for but thank you for the quick reply.
You could sell BOTH qualifying properties and buy another investment property.
My goal was to try and pay-off my investment properties with the ones I sell for short term gains. It would have been nive to do this without paying taxes at first.
Do you have to hand anything in to an official body on exactly the 45th day? Can you back date your choices when you do hand something in, like maybe the day you close?
If you purchase a property that is not one of your properly identified properties, then the exchange fails.
When Mr. Starker did the first delayed exchange, his exchange timeline was over two years. Over time, Congress has amended the tax code to set specfic timelines for certain exchange events often as a response to curtail abuses.
The tax code is law and the exchange rules are not flexible.
Quote:
On 2007-10-21 18:16, bgrossnickle wrote:
Do you have to hand anything in to an official body on exactly the 45th day? Can you back date your choices when you do hand something in, like maybe the day you close?
Brenda,
The qualified intermediary (QI) must have "received" the list of properties you wish to identify as your replacement property on or before the 45th day after the relinquished property settles. The identification is considered received if faxed, postmarked, or otherwise identifiably transmitted (such as with FedEx or other dated courier service) on or before the 45th day of the identification period.
Since the QI has to have receipt within the 45 day identification period, backdating is a moot question.