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Why is the 8824 generating boot when the buyers had to add money into the purchase?

gsa11
Level 2

I am completing the 8824 for a 1031 exchange of a rental property.  FMV of new property is $1 million. New loan is $700K.  1031 intermediary put in $300K cash.  Clients had to contribute an additional $15K for closing costs.

Old property sold for $950K. Selling expenses were $45K. Old mortgage payoff at closing was $600K.  It was originally bought for $780K and has had $55K in depreciation taken.

Proseries says that the client must have received $50K cash/boot.

$1mil - 700k = 300k

$950K-600K = 350K, net difference is $50K cash received

What am I missing?

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1 Comment 1
Terry53029
Level 13
Level 13

Probably because your client is receiving $50K equity (new property $1,000,000 - $700,000 mtg = 300K. property given up $950,000 - $600,000 = $350k)