1031 Exchange and form 8824

[Giammusso]

My client exchanged rental properties through a 1031 exchange. 

Property Sold: 

FMV 510k, $185k mortgage paid off at closing, Cash received at closing $300k. Original Basis $225k bought in 2004. 

Property Acquired

FMV $720k, mortgage taken $540k. 

There should be taxable boot as some of the cash from the sale was put into the clients new personal home (not the new rental) 

Proseries is figuring this all as a non-taxable transaction so there's something I'm not entering on the form or worksheet correctly. 

Any help is appreciated!

[ljr]

I don't think you need the mortgage amount - the FMV of the property acquired needs to be equal or more than the value of the property given up (don't remember if you need to take depreciation into account) but in this case it looks like it would be nontaxable 

I haven't done one in a while so let's see what others have to say 

[Giammusso]

Thanks. Appreciate the feedback.  I thought on a 1031 all of the proceeds had to go into the new exchanged property. In my client's case he used about $100k for his personal home? This is where I'm stuck as to how that gets reported. Or not.