Relinquished Property Assumptions and Parameters
Current FMV ($)
$2,000,000
Current estimated sales price of the Relinquished Property
Initial cost basis ($)
$1,000,000
Initial Relinquished Property purchase price
Current debt amount ($)
$600,000
Interest rate on debt (%)
5%
CAP Rate, NNN (%)
6%
Debt Service ($)
Pre-tax Income, monthly
Amount subject to 39 year depreciation ($)
$800,000
For commercial real estate, typically 80% of the initial basis
Amount subject to 27.5 year depreciation ($)
$0
For residential real estate, also 80% of the initial basis
Amount subject to 7 year depreciation ($)
$0
Amount subject to 5 year depreciation ($)
$0
Total depreciation, monthly
Replacement Property Assumptions and Parameters
Anticipated purchase price ($)
$3,000,000
Debt amount ($)
$1,600,000
Secured debt
Interest on debt (%)
4%
Cap Rate (%)
7%
Debt service
Pre-tax Income, monthly The difference between the lease payment and the debt service
Amount subject to 39 year depreciation ($)
$1,600,000
For commercial real estate, typically 80% of the initial basis
Amount subject to 27.5 year depreciation ($)
$0
For residential real estate, also 80% of the initial basis
Amount subject to 7 year depreciation ($)
$0
Amount subject to 5 year depreciation ($)
$0
Total depreciation, monthly
Delayed Exchange Parameters
Exchange fee ($)
$750
Interest rate on proceeds (%)
0.250%
Interest paid by the QI on the exchange proceeds
Expected months to acquire Replacement Property
3
Reverse Exchange Parameters
Reverse exchange fee ($)
$5,000
Expected months to sell Relinquished Property
3
Cost of money to acquire Replacement Property (%)
1%
Cost of money needed to acquire Replacment Property in advance of the sale of the Relinquished Property. If the funds are held in a bank account with a typical yield, the amount would likely be < 1%
Delayed Exchange Economics
Interest earned on proceeds
Net income on Replacement Property ($)
$0
There is no rent from the Replacement Property during a delayed exchange
Net income on Relinquished Property ($)
$0
The Relinquished Property has been sold
Less exchange fee ($)
$750
Pre-Tax Income, Delayed Exchange
Reverse Exchange Economics
Interest earned on proceeds ($)
$0
There are no exchange proceeds in a reverse exchange
Net income on Relinquished Property
Net income on Replacement Property
Less cost of funds Cost of advance funds required to buy the Replacement Property. These funds are typically the difference between the total purchase price and the loan proceeds
Less exchange fee
Pre-Tax Income, Reverse Exchange
Available Depreciation Deductions
Monthly Depreciation, Exchange First Available monthly deduction if Relinquished Property is parked
Monthly Depreciation, Exchange Last Available monthly deduction if Replacement Property is parked
Monthly Depreciation, Delayed Exchange $0