Can an unsecured liability such as the $25,000 I received from my credit card company and used for working capital be netted against the new liability I will incur to purchase my Replacement Property?
The answer to this question is important because if the payoff of credit card debt is not able to be netted against the new liability incurred to purchase the Replacement Property, it will be considered cash boot and taxable to the client. The credit card debt payoff will not be considered cash boot and taxable if the client is contractually required to pay off the credit card debt at the closing of the Relinquished Property. The simplest way to make sure that this happens is by including the required payoff of the credit card debt in their sales agreement for the Relinquished Property.
Please call me at 800-351-1031 or email me if you would like to set up a consultation or a 1031 presentation at your office.
Warmly,
Stephen Venuti
610-353-0686
Stephen J. Venuti, CPA, MST, LLC
