Jump to content

Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at GolfWRX such as viewing all the images, interacting with members, access to all forums and eligiblility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE GolfWRX account here.

- - - - -

Sale Of Rental Property Question


  • Please log in to reply
8 replies to this topic

#1 Hybrid

Hybrid

    Member

  • Advanced Members
  • PipPipPip
  • 162 posts
  •  
  • Member #: 33268
  • Joined: 06/29/2007
GolfWRX Likes : 37

Posted 04 December 2018 - 04:55 PM

My renters want to but my house. I have depreciated it for tax purposes. Since I canít depreciate the land, how is that reconciled at sale time?  I do not want to lose the land value.


Remove This Advertisement Viewing As Guest

    GolfWRX Forums

    Advertisement


1

#2 raynorfan1

raynorfan1

    Major Winner

  • Advanced Members
  • PipPipPipPipPipPip
  • 3,224 posts
  •  
  • Member #: 119065
  • Joined: 12/17/2010
GolfWRX Likes : 1774

Posted 04 December 2018 - 11:33 PM

You pay capital gains tax on your gain, which is the price the buyers pay minus transaction costs, minus your original purchase price, plus the sum of all the depreciation youíve taken over time. Assuming no major capital improvements.

2

#3 KAndyMan

KAndyMan

    JUST GOTTA SEND IT!!!

  • Advanced Members
  • PipPipPip
  • 105 posts
  •  
  • Member #: 497560
  • Joined: 03/31/2018
  • Location:MI
  • Handicap:many
GolfWRX Likes : 101

Posted 05 December 2018 - 10:24 AM

Pretty sure you can skip the capital gains tax if you reinvest the money (by another rental). Just find a great real estate lawyer preferably one that plays your game them self. If they are good they will make you much more than they cost.

3

#4 raynorfan1

raynorfan1

    Major Winner

  • Advanced Members
  • PipPipPipPipPipPip
  • 3,224 posts
  •  
  • Member #: 119065
  • Joined: 12/17/2010
GolfWRX Likes : 1774

Posted 05 December 2018 - 02:50 PM

View PostKAndyMan, on 05 December 2018 - 10:24 AM, said:

Pretty sure you can skip the capital gains tax if you reinvest the money (by another rental). Just find a great real estate lawyer preferably one that plays your game them self. If they are good they will make you much more than they cost.

You can do a 1031 exchange if you reinvest the proceeds in another investment property, and defer taxes until you eventually exit the investment.

4

#5 jerebear21

jerebear21

    Don't Go Left

  • ClubWRX Charter Members
  • 2,672 posts
  •  
  • Member #: 338509
  • Joined: 09/08/2014
  • Location:St Petersburg, FL
  • Handicap:8.3
GolfWRX Likes : 1754

Posted 05 December 2018 - 03:21 PM

View Postraynorfan1, on 05 December 2018 - 02:50 PM, said:

View PostKAndyMan, on 05 December 2018 - 10:24 AM, said:

Pretty sure you can skip the capital gains tax if you reinvest the money (by another rental). Just find a great real estate lawyer preferably one that plays your game them self. If they are good they will make you much more than they cost.

You can do a 1031 exchange if you reinvest the proceeds in another investment property, and defer taxes until you eventually exit the investment.

if you need the cash, you keep the partial cap gains and pay tax on that(partial) while doing a 1031 exchange as well; there is a time limit though.

thehuyhuynhfoundation.com

RogueSz 1w, 3w, 5w
Titleist 718 AP2 5-PW, AP3 4i, 3i w/tensei pro white tx
Fourteen RM22 53/58
CircleT newport

5

#6 Hybrid

Hybrid

    Member

  • Advanced Members
  • PipPipPip
  • 162 posts
  •  
  • Member #: 33268
  • Joined: 06/29/2007
GolfWRX Likes : 37

Posted 05 December 2018 - 03:44 PM

Here is my concern. We bought a 1 acre lot and later built a house. The house is now a rental. Our renters want to buy the house. How can I separate the house, which I have depreciated from the land so I do not show capital gains?  Do I need a separate agreement for the land?

Edited by Hybrid, 05 December 2018 - 03:46 PM.


6

#7 jerebear21

jerebear21

    Don't Go Left

  • ClubWRX Charter Members
  • 2,672 posts
  •  
  • Member #: 338509
  • Joined: 09/08/2014
  • Location:St Petersburg, FL
  • Handicap:8.3
GolfWRX Likes : 1754

Posted 05 December 2018 - 03:51 PM

are you trying to avoid tax on cap gains completely? it's not possible unless you do a 1031 flip.  When you built the home, they should have done an appraisal and reset your property tax with the property. I don't get where you're going with this. Do you plan to sell the home and keep the lot?

ok, I see what you're saying/done.  I don't think there's ways around this bud.  Partial cap gains + 1031 flip is what I would do.

Edited by jerebear21, 05 December 2018 - 03:52 PM.

thehuyhuynhfoundation.com

RogueSz 1w, 3w, 5w
Titleist 718 AP2 5-PW, AP3 4i, 3i w/tensei pro white tx
Fourteen RM22 53/58
CircleT newport

7

#8 raynorfan1

raynorfan1

    Major Winner

  • Advanced Members
  • PipPipPipPipPipPip
  • 3,224 posts
  •  
  • Member #: 119065
  • Joined: 12/17/2010
GolfWRX Likes : 1774

Posted 05 December 2018 - 04:35 PM

View PostHybrid, on 05 December 2018 - 03:44 PM, said:

Here is my concern. We bought a 1 acre lot and later built a house. The house is now a rental. Our renters want to buy the house. How can I separate the house, which I have depreciated from the land so I do not show capital gains?  Do I need a separate agreement for the land?

You must have a basis number that you're using for depreciation, which should be the cost of building the house (plus capital improvements), not including the cost of the land (because the land is non depreciable). Unless you've owned the house for 27.5 years, it's not fully depreciated. One of the reasons that the IRS doesn't get super picky about the amount you depreciate is because they know they get most of it back on the cap gain.

Your cap gains is the sale price that you get, net of transaction costs, minus the amount you paid for the land, minus the amount it cost you to build the house, plus the depreciation that you've taken.

Edited by raynorfan1, 05 December 2018 - 04:57 PM.


8

#9 Hybrid

Hybrid

    Member

  • Advanced Members
  • PipPipPip
  • 162 posts
  •  
  • Member #: 33268
  • Joined: 06/29/2007
GolfWRX Likes : 37

Posted 05 December 2018 - 05:09 PM

Thanks ray, that is exactly what I was referring to.

9



0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users

GolfWRX Sponsors