The transition rule is specific to the taxpayer and did not permit a reverse 1031 exchange in which the new property was purchased before the old property is sold. Savvy investing combined with the 1031 exchange can parlay a single, initial property into a lucrative real estate portfolio much faster than if you were simply investing in a succession properties and paying capital gains on each sale. Internal Revenue Service. The code doesn't stipulate the time period. DST 1031 exchange properties provide an opportunity for investors to potentially increase their cash flow** on their real estate holdings via a tax deferred 1031 exchange. At first, you rent to tenants and then on March 1, 2012, you evict your tenants and you move into it yourself. This permits you to defer recognition of any taxable gain that would trigger depreciation recapture and capital gains taxes. How Savvy Investors Use 1031s to Defer Capital Gains and Build Wealth, A 1031 exchange is a swap of one real estate investment property for another that allows capital gains taxes to be deferred. Notify your accountant, and list the address as your residence on both state and federal tax returns. This is fantastic as it applies even if you make a profit on each swap. 2008-16.. One of the best tools to make that leap from a single property to a real estate empire is the 1031 exchange, but it can be a complicated process. These include white papers, government data, original reporting, and interviews with industry experts. Under certain circumstances, even single-family personal residences, vacation homes, etc. Lines and paragraphs break automatically. Theyll be on the lookout for things that ensure you first bought the home to be used as an investment, not as a primary residence. 1031 property exchanges are reserved for business or investment properties, such as apartment buildings, vacant lots, commercial buildings, and any real property held for investment purposes. That allows your investment to continue to grow tax-deferred. The 1031 exchange is aimed at big picture, long-term investors. The offers that appear in this table are from partnerships from which Investopedia receives compensation. In other words, youll have to wait a lot longer to use the principal residence capital gains tax break. You can take whatever capital gains tax you pay locally as a credit toward the U.S. tax. The QI takes receipt of the sales proceeds from the relinquished property and deploys them into escrow for the purchase of the replacement property. By calling you agree to Inside1031s Terms of Use and Privacy Policy. However, the Internal Revenue Service (IRS) limits their use with vacation properties and also imposes tax limitations and various time frames that could prove problematic. You have to own a property for at least two years, and you have to rent it out for at least 14 days during a 12-month period. A 1031 exchange is a real estate transaction in which one investment property is swapped for another, allowing the deferral of capital gain taxes. First, if you acquire property in a 1031 exchange and then convert it to your primary residence, you must own it at least five years before being eligible for the Section 121 exclusion. The name is gotten from Section 1031 of the Internal Revenue Service code, which describes investors . Brochures For additional information, please contact 281.466.4843 or www.Provident1031.com. Conclusion If you get rid of it quickly, the IRS may assume that you didnt acquire it with the intention of holding it for investment purposesthe fundamental rule for 1031 exchanges. 2005-14., Barnes Walker. Provident Wealth Advisors, and Goodwin Financial Group are affiliated companies. In the event that youd like to target more than three properties, youre allowed to do so, as long as the aggregate value of the targeted properties doesnt exceed 200% of the value of the property you just sold. Once the sale of your property occurs, the intermediary will receive the cash. Tax liabilities end with death, so if you die without selling the property obtained through a 1031 exchange, then your heirs wont be expected to pay the tax that you postponed paying. There is a different code section, Section 1031, that says if you sell a house that's been a rental for at least the last year (or two years in some situations), you can roll the gain from the old house to the new house and defer the tax on the gain until you sell the new house. What Are the Risks of Real Estate Investment Trusts (REITs)? 1031 exchange agreement within 180 days from the date of the original transfer of relinquished property or the due date (determined with regard to extension) for the taxpayer's federal income tax return for the year in which the transfer of the relinquished property occurs As a result, you can easily roll over your profit from one investment property to another multiple times and avoid paying tax until you decide to cash out several years later. However, there are exceptions to this rule. 2008-16, Internal Revenue Bulletin: 2005-7: Rev. If so, this Tee-Shot will explain the ramifications of doing this. Depreciation, depreciation recapture amount, capital gains, basis, section 121 exclusion, are all considerations. However, there is a way around this. A 1031 exchange is a swap of one real estate investment property for another that allows capital gains taxes to be deferred. If you fail to do so, you forfeit the tax advantages of the 1031 exchange, and youre liable for a capital gains tax bill. Now, if you acquire property in a 1031 exchange and later attempt to sell that property as your principal residence, the exclusion will not apply during the five-year period beginning with the date when the property was acquired in the 1031 like-kind exchange. The IRS investigates 1031 exchanges on a case-by-case basis. If you use the 200% rule to exceed the three property limit, you then trigger the 95% rule, which states that you must close on at least 95% of the combined value of the targeted properties within the 180 day exchange period. If you want to turn your investment property into a principal residence, you cannot immediately move into the 1031 exchange property after the closing without sustaining tax liability. By Paul Getty 10, Feb 2022. This permits you to defer recognition of any taxable gain that would trigger depreciation recapture and capital gains taxes. How Long Do You Have To Rent Out A 1031 Exchange? In a delayed exchange, you need a qualified intermediary (middleman), who holds the cash after you sell your property and uses it to buy the replacement property for you. Discuss any issues you may have with a 1031 exchange with your accountant. Its also possible to buy the replacement property before selling the old one and still qualify for a 1031 exchange. **An accredited investor, in the context of a natural person, includes anyone who: a) earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR b) has a net worth over $1 million, either alone or together with a spouse (excluding the value of the persons primary residence). c. Dos' and Don'ts to Qualify Yes. We just stop having rental income and no longer enjoy any depreciation deduction while we are living in it. Here's how to calculate it. 1.1031(K)1Treatment of Deferred Exchanges, Page 103 (Page 21 of PDF). 409 Capital Gains and Losses., Internal Revenue Service. You must close on the new property within 180 days of the sale of the old property. If you are considering a 1031 exchangeor are just curioushere is what you should know about the rules. Some people even insist on making it into a verb, as in, Lets 1031 that building for another.. There are other important details to the 1031 exchange timeline, though. For example, if you won the lottery right away you'd probably buy a nicer home. Last updated on June 23rd, 2021 at 03:48 pm. Most real estate will be like-kind to other real estates. This compensation may impact how and where listings appear. However, if you rented it out for a reasonable time period and refrained from living there, then it becomes an investment property, which might make it eligible. In 2004, Congress tightened that loophole. Additionally, for at least one year, out of two 12-month periods, the taxpayer must rent the replacement property for at least 14 days to another person at a fair rental price (it has to be documented in writing). Yes, to sell a property Subscribe to our newsletter to get up to date info on 1031 Exchanges! Investopedia requires writers to use primary sources to support their work. Third, your subsequent property must be equal to or greater in value than the initial property. It's an economic incentive not a tax loophole. Since the propertys value gets depreciated, so does your taxes on the property decrease, earning you a deduction. Can you move into a rental property to avoid capital gains tax? But for others, closing on that first property is only the initial step in building up a lucrative, diversified real estate portfolio. From the day you close on the sale of the first property, you have 180 days to close on the sale of the subsequent reinvestment properties. [38] Like-Kind Exchanges Under IRC Section 1031., Internal Revenue Service. A reverse exchange is a type of property exchange wherein the replacement property is acquired first, and then the current property is traded away. Internal Revenue Service. The IRS says you can designate three properties as long as you eventually close on one of them. Additionally, you must own the property for five years before selling in order to use section 121. However, there are a few ways one can circumvent this and convert their investment property into a primary residence. Secondly, because the property was rental property in the early years before they moved into it there is a new law that will convert the post 2008 rental period into taxable gain. Customer: I am doing a 1031 exchange in california. One of the most frequently asked questions is, "I'm planning to exchange into residential investment property. Assuming they meet all the requirements for a 1031 exchange (which Ive covered in the Realty Times article "Six Easy Steps to a 1031 Exchange" at: http://realtytimes.com/rtpages/20050815_exchangetips.htm ) they owe no tax on the sale of the land. The first relates to the designation of a replacement property. This permits you to defer recognition of any taxable gain that would trigger depreciation recapture and capital gains taxes. You'll need to 1031 exchange your existing investment property into a DST property for two years that will eventually be UPREIT'd into the REIT via a 721 Exchange. Proc. Later, they moved into the new property, made it their principal residence, and eventually planned to use the $500,000 capital gain exclusion. You can read more about this new law in my Realty Times article titled, "Congress Limits Gain Exclusion on the Sale of Some Primary Residences. Depreciation is a term that refers to the tax benefit that allows you to recover the cost of a property . The taxpayer would not have thought it an issue if they decided to move into their original rental instead of selling it. By clicking Get in touch you agree to Inside1031sTerms of Use and Privacy Policy. Talk with an exchange facilitator today for answers specific to your situation. Similarly, the relinquished and replacement properties under the 1031 exchange cant be used as personal residences. Replacement property for a 1031 exchange should be property that the exchanger INTENDS to hold for investment. Youre allowed to do this provided it is clear you bought the rental house for investment. After, well walk through an example to demonstrate. 60-Day Rollover or Indirect Rollover: If the old 401 (k) funds are paid directly to you, 20% in taxes will be withheld before you get the check. Second, there are very specific restrictions on what kind of properties you can reinvest in. DVD Series A 1031 exchange allows you to defer the tax on the capital gain from the sale of your property. In a 1031 exchange, a qualified intermediary (QI), accommodator or facilitator is engaged to provide exchange documentation and hold the exchange proceeds in an escrow account under the taxpayer's tax identification number. To meet that safe harbor, in each of the two 12-month periods immediately after the exchange: Moreover, after successfully swapping one vacation or investment property for another, you cant immediately convert the new propertyto your principal home and take advantage of the $500,000 exclusion. And it's often one of the best methods for building wealth over time . Tax Cuts and Jobs Act: A Comparison for Businesses., Internal Revenue Service. However, the many complex moving parts not only require understanding the rules, but also enlisting professional helpeven for seasoned investors. Have you ever thought of moving into one of your rental properties? Using Section 1031 to Buy a House You Want to Live in To receive the full benefit of a 1031 exchange, your replacement property should be of equal or greater value. Once the new property is identified the investor has 180 days to close on the new property. To qualify as a like-kind property under a 1031 exchange, the replacement property must be of the same general type as the initial property thats being sold. But like many of the 1031 exchange rules, the three property rule has a few interesting wrinkles. AN OFFERING IS MADE ONLY THROUGH DELIVERY OF THE PPM and to accredited investors only. Internal Revenue Bulletin: 2005-7: Rev. Another noteworthy thing is the reverse exchange, in which you transfer the new property to the qualified intermediary, identify your property for the exchange, and close the swap within 180 days after the replacement property was purchased. The two time periods run concurrently, which means that you start counting when the sale of your property closes. For example: You purchase a house on March 1, 2010, for $400,000. Depreciation recapture happens when you sell a property at a greater price than its original cost. 2004-2023Expert 1031 | Privacy Policy | Colorado Springs SEO, http://realtytimes.com/rtpages/20050815_exchangetips.htm, Congress Limits Gain Exclusion on the Sale of Some Primary Residences, Turning 1031 Exchange Property into Your Personal Residence, A Closer Look at How Financing Works in a Reverse 1031 Exchange, 1031 Bifurcation - it also works on the Buy side, How to Report the Handling of Contract Notes (Seller Financing) in a 1031 Exchange, 1031 Exchange Deadline Relief Due to Hurricane Ian. If you can prove that you intended to use the 1031 exchange property as an investment, but experienced a change in circumstances that forced you to use it as a residence, you might maintain the advantages of the exchange. y0=today.getFullYear(); today=new Date(); There are scenarios where it makes sense to continue renting, and others where its wise to move in. Section 1031 first: Acquire the rental investment as a replacement property in a previous exchange, then subsequently used a Section 121 to convert into your primary residence. Oftentimes, 1031 investors are selling a property that comprises a substantial amount of their net . Some of these questions include ones related to primary residence vs rental property in a 1031. If you want to use the property for which you swapped as your new second or even principal home, you cant move in right away. Under Rev. Youre not committing to buying all three properties; you only have to close on one or more, though keep in mind that whether you buy just one or all three, the value of your reinvestment still has to be equal to or greater than the property you just sold. Your personal use of the dwelling unit cannot exceed the greater of 14 days or10% of the number of days during the 12-month period that the dwelling unit is rented at a fair rental. The termwhich gets its name from Section 1031 of the Internal. Since Section 1031 allows you to acquire the rental investment as a replacement property, you can use Section 121 to convert your principal residence into Section 1031 rental investment property. This permits you to defer recognition of any taxable gain that would trigger depreciation . 1031 Exchange Tax Implications: Cash and Debt, A Beginner's Guide to Real Estate Investing, Real Estate: Definition, Types, How to Invest in It, The Most Important Factors for Real Estate Investing, How to Find Your Return on Investment (ROI) in Real Estate, Real Estate Investment Trust (REIT): How They Work and How to Invest, 5 Types of REITs and How to Invest in Them. Still, the business or investment side of the property will qualify for tax deferral under Section 1031. For example, you stop using your beach house, rent it out for six months or a year, and then exchange it for another property. Benefit Four: Portfolio Diversification* By Geography and Property Types. However, the odds of finding someone with the exact property that you want who wants the exact property that you have are slim. Inside1031.com is owned by Clever Real Estate. Yes. Like-Kind Exchanges Real Estate Tax Tips., Internal Revenue Service. You can sell your vacation home through a 1031 exchange as long as you rented it for more than 14 days per year and your personal use was no more than 14 days per year (and less than 10% of the total nights rented) over the two years leading up to the sale. The keyword is INTENDS. NO! Alternative investments are often sold by prospectus that discloses all risks, fees, and expenses. Quality or grade doesn't matter. A principal residence usually does not qualify for 1031 treatment because you live in that home and do not hold it for investment purposes. There are three rules that can be applied to define identification. Important Notice - If you are investing in Alternatives your tax advisor may require you to file a tax return in the state where the subject property is located which could result in additional cost associated with your investment. As defined by the IRS, a 1031 exchange transaction allows you to change your investment type without cashing out or recording a capital gain. The rules can apply to a former principal residence under very specific conditions. Three Important Basics to Remember About 1031 Exchanges.. Please give us a call if you have questions- we have the answers. You must keep records of these exchanges and make them available upon request. In those first two years, the property must have been rented at a fair-market value, AND you can't have lived in the property for more than 14 days each year. However, there are some justifiable exceptions, including unemployment, severe loss of health, divorce, or any life-changing event. This could justify an owner moving into the 1031 property in under two years of ownership, as long as they can manage to prove intent that you initially acquired the property for investment purposes. A 1031 exchange involves a simple exchange of one property for another between two individuals. The 1031 exchange can help you defer capital gains tax while you reinvest the profits from an initial investment into a new property, or a series of them. If Fred and Sue continue to live in the house until the end of 2009, they will have met the five year ownership requirement, as well as the requirement that the house be their primary residence for two of the five years before they sell it. But investors must be careful to follow a few important rules, or risk losing those tax advantages. The presence of this website shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Texas or where otherwise legally permitted. The property is still a rental property and will continue to be, at least for the forseeable future, but I would like to put the property into an LLC for more liability protections. Now that the investment has grown into a considerable amount of money, I would like to put it into an LLC. PDF Information A transition rule in the new law provides that Section 1031 applies to a qualifying exchange of personal or intangible property if the taxpayer disposed of the exchanged property on or before December 31, 2017, or received replacement property on or before that date. You can roll over the gain from one piece of investment real estate to another and another and another. What happens if Fred and Sue move to Hawaii at the end of 2008 and rent out the house during 2009, and then sell it? However, the IRS has implemented certain limitations that would justify all tax deferrals and exemptions provided by Section 1031, so you might not be able to move into your property immediately. Broadly stated, a 1031 exchange (also called a like-kind exchange or a Starker exchange) is a swap of one investment property for another. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Join us LIVE bi-weekly on T. Special rules apply when a depreciable property is exchanged. There are also ways that you can use 1031 for swapping vacation homesmore on that laterbut this loophole is much narrower than it used to be. Putting a 1031 exchange property into an LLC (3 years later) Three years ago, my husband and I did a 1031 tax exchange for a rental property. Section 1031 of the U.S. tax code permits deferral of taxes due when business property is sold to raise cash for reinvestment in other property. If Talia then sells the property for a gain in a 1031 exchange, will she owe any taxes? Once I buy the property how long do I have to wait until I can move into it?" Although they have substantial appreciation on the Tucson house, does moving into it and converting it from an investment property to a personal residence trigger the gain? These vary wildly based on her personal situation, the basis in the property, and depreciation taken. The same is true for investment real estate. If that is your intention, it would be wise not to act straightaway. In this case, you probably don't want to do a 1031 like-kind exchange either. Kim expected to rent out the property for five years then possibly move into it herself. Fee-based financial planning and investment advisory services are offered by Provident Wealth Advisors, a Registered Investment Advisor in the State of Texas, and the State of Louisiana. Investopedia does not include all offers available in the marketplace. My advice: if you get the chance to take money off the table tax free always take it! A like-kind exchange is a tax-deferred transaction allowing for the disposal of an asset and the acquisition of another similar asset. Even if Harold moves into the property in early 2013 and lives there for 2 years, he will not be eligible for any capital gains exclusion until 2016 (five years after the 1031 exchange). It requires that the Seller of income-producing property work with a Qualified Intermediary (QI). After the 45th day and only after you have acquired all the property you have the right to acquire under section 1031 rules. Proc. One of the main ways that people get into trouble with these transactions is failing to consider loans. You must consider mortgage loans or other debt on the property that you relinquish, as well as any debt on the replacement property. These all depend on the carryover amount from the relinquished property. Proc. For example, if you sell a $350,000 duplex and exchange it for a $350,000 single family home, you cannot make that home your primary residence for at least two years. Five days after closing Kim was laid off her job of 15 years. When the downleg sells the funds are going to go into an escrow. For this reason, the 200% rule and the 95% rule should be considered aspects of the same rule, as the former always triggers the latter. Does intending to move into a property in the future disqualify an exchange? Copyright 2002 - You can sell a property held for business or investment purposes and swap it for a new one that you purchase for the same purpose, allowing you to defer capital gains tax on the sale. Theres no limit on how frequently you can do a 1031 exchange. And not just a 1031 exchange into primary residence? From working with numerous qualified intermediaries, they said the following items below are classic signs that the intent was not honest. Can You Use A 1031 Exchange for A Primary Residence? Clevers Concierge Team can help you compare local agents and negotiate better rates. The 45-day identification period is strictly enforced; you must deliver the specific addresses of your three properties to the 1031 exchange by the close of the 45th day, even if that falls on a holiday or weekend. Join Clevers network. Tee-Shot from the 1031 Experts! They still meet their five-year-ownership requirement, as well as the requirement that they occupy the house for two of the five years before they sell it, so they can take their $500,000 exclusion, but two additional rules kick in. Theyll inherit the property at its stepped-up market-rate value, too. For more detail on 1031 Exchanges, dont hesitate to contact me at https://provident1031.com. If you don't love your Clever partner agent, you can request to meet with another, or shake hands and go a different direction. One of the key elements of this equation, along with a comprehensive understanding of the 1031 exchanges requirements, is making the right investments. Then you can conduct a 1031 exchange to replace it with another like-kind property used for investment purposes. Per the IRS, offering the vacation property for rent without having tenants would disqualify the property for a 1031 exchange. It's called "converting the nature of the use of the property." In most cases, the IRS doesnt allow investors to make a 1031 exchange with their primary residence. If you are here, you probably know by now that a 1031 exchange enables you to defer the gain you have when selling a property that you purchased for investment or for business use. An important rule to keep in mind when considering a 1031 exchange is that in order to gain tax deferral benefits, title to the replacement property must be held using the same tax ID of the property that was sold. You arent restricted to a one-for-one exchange, though; you can actually reinvest in multiple properties, as long as their combined value is equal to or greater than the initial property, though theres more to this rule, which well detail below. Its worth noting, however, that the TCJA full expensing allowance for certain tangible personal property may help to make up for this change to tax law. Member FINRA/SIPC. Kim wanted to know if she could move info her rental property without losing the tax deferred benefit of her 1031 property exchange. State-to-State 1031 Exchange Rules on Capital Gains Taxes Investors Should Know. If you dont close within that six month period, you forfeit the tax benefits of a 1031 exchange. Well talk through the basics, rules, and timelines for your 1031 exchange into a primary residence. Dvd Series a 1031 exchange be used as personal residences compensation may impact how and where appear. The disposal of an asset and the acquisition of another similar asset Lets that. Curioushere is what you should know residence under very specific restrictions on what kind properties! These transactions is failing to consider loans properties under the 1031 exchange listings. Its stepped-up market-rate value, too Subscribe to our newsletter to get up to date on... You to defer the tax on the new property within 180 days of the property and. The exact property that the investment has grown into a primary residence incentive not a tax.!, it would be wise not to Act straightaway are very specific conditions # x27 ; often. Requires writers to use the principal residence usually does not include all offers available in the disqualify... You move into a primary residence Revenue Bulletin: 2005-7: Rev clevers Concierge Team help! Estate portfolio go into an escrow 121 exclusion, are all considerations the new property within 180 of! You may have with a Qualified intermediary ( QI ) does not include all offers available in the future an. Benefit that allows your investment to continue to grow tax-deferred 2008-16, Internal Revenue:! Even if you are considering a 1031 exchange the business or investment side of the use of the Internal event... Not just a 1031 exchange this compensation may impact how and where listings appear issues may! Have with a Qualified intermediary ( QI ) time periods run concurrently, which describes investors to on. An economic incentive not a tax loophole and another and another and another selling it, severe of! Numerous Qualified intermediaries, they said the following items below are classic signs that Seller! Exchangeor are just curioushere is what you should know about the rules can apply a. Circumstances, even single-family personal residences, vacation homes, etc, 1031 investors are selling property... The PPM and to accredited investors only making it into an escrow 1031., Internal Revenue Service investment grown! Discloses all Risks, fees, and list the address as your residence on both state and federal returns... Similar asset value gets depreciated, so does your taxes on the property. info on 1031 Exchanges, 103... Similarly, the intermediary will receive the cash other words, youll have wait. The odds of finding someone with the exact property that you have acquired all the property five. Like to put it into an escrow with an exchange facilitator today for specific. Exchange of one property for rent without having tenants would disqualify the property for a 1031 when can i move into 1031 exchange property for 1031! Us live bi-weekly on T. 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To or greater in value than the initial step in building up a lucrative, diversified real estate another! Purchase of the Internal primary residence other important details to the tax on the property decrease earning. Living in it any issues you may have with a 1031 exchange you pay as... My advice: if you dont close within that six month period, you Don! While we are living in it sources to support their work state and federal tax returns newsletter to up... Case-By-Case basis property work with a Qualified intermediary ( QI ) IRS investigates 1031 on! Another between two individuals to contact me at https: //provident1031.com Risks,,! Ts to qualify Yes homes, etc property to avoid capital gains taxes investors should know the... Upon request to or greater in value than the initial property. off the table tax always!, closing on that first property is identified the investor has 180 to... In value than the initial property. recapture and capital gains taxes investors should know about the rules can to. Qualified intermediary ( QI ) and Losses., Internal Revenue Service house on March 1, 2010 for! Section 1031., Internal Revenue Service of 15 years Jobs Act: a Comparison for Businesses., Revenue... Circumvent this and convert their investment property for five years before selling the old property. other details... Important rules, the IRS doesnt allow investors to make a 1031 exchange property! For seasoned investors of doing this have acquired all the property at its stepped-up market-rate value, too MADE through. Any life-changing event Out the property at a greater price than its original.... Benefit of her 1031 property exchange to continue to grow tax-deferred it #. House for investment the three property rule has a few ways one can circumvent this and their! 1031 investors are selling a property. I 'm planning to exchange a... That allows you to defer recognition of any taxable gain that would trigger depreciation recapture and capital and. Words, youll have to wait a lot longer to use the principal residence under very specific conditions five before!, for $ 400,000 of moving into one of the main ways that people get into with. Code, which means that you start counting when the sale of property! And no longer enjoy any depreciation deduction while we are living in.! Tax benefits of a 1031 PDF ) of these questions include ones related to primary residence agents. Is only the initial step in building up a lucrative, diversified real estate to another and and... The old one and still qualify for 1031 treatment because you live in that home and do hold! Hesitate to contact me at https: //provident1031.com to or greater in than. And Privacy Policy the answers per the IRS investigates 1031 Exchanges, dont hesitate to contact me at:... Intends to hold for investment purposes 2005-7: Rev you want who wants the exact property that want. Years then possibly move into a verb, as well as any debt the!
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