ASSUMPTION OF DEBT: EXAMPLE (3 OF 3)
01.Core Concepts
Ryan’s Transaction: (New Property) After Exchange (Old Property) Before Exchange $400,000 FMV $500,000 FMV* 200,000 New Basis 200,000 Basis $200,000 Potential Gain $300,000 Potential Gain *$100,000 Mortgage * Subject to Mortgage Boot $100,000 (mortgage) to Ryan. Recognized gain equal to debt relieved of $100,000.