Can the taxpayer refinance a property immediately prior to the exchange?
Recent tax authority suggests that a refinancing of the relinquished property prior to sale with receipt of cash by the exchanger may not be deemed as “cash boot” under certain limited circumstances. This course of action is not generally recommended. In the event the exchanger needs cash for an independent business purpose, it is strongly recommended that the exchanger refinance the replacement property after the acquisition and when the independent need for cash arises.
Related Questions
- If the homeowner chooses to refinance any other mortgages on the property prior to the conclusion of the Retention Period, must the AHP subsidy be repaid??
- What happens if the taxpayer is in escrow to sell the relinquished property and then decides the want to make it part of a tax-deferred Exchange?
- What happens if the taxpayer changes their mind about buying a replacement property and wants to cancel the exchange?
