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Capital Gains Tax question

Old 02-20-2019, 02:36 AM
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Long story short I am selling a house that I have owned for 12 years. I lived in it for the first 4 and have rented it out since then. I bought it for $195,000 (in 2006 just before the recession) and am under contract right now for $178,000. Since I’m technically taking a loss from what I paid for it will I still pay capital gains tax on the money I’m walking away with at closing?
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Old 02-20-2019, 02:53 AM
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To me the question is will you get to claim a $17k capital loss.
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Old 02-20-2019, 02:54 AM
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You have to recapture depreciation as well
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Old 02-20-2019, 03:33 AM
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Yep gov. will charge the depreciation against you loss. But then you’ll have any expenses associated with the sale in the mix.
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Old 02-20-2019, 03:34 AM
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https://www.irs.gov/businesses/small...state-tax-tips
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Old 02-20-2019, 03:42 AM
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Original cost plus capital improvements less depreciation for 8 years = adjusted basis less net selling price = gain or loss.
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Old 02-20-2019, 04:11 AM
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Originally Posted by LongIslandFisherman View Post
Original cost plus capital improvements less depreciation for 8 years = adjusted basis less net selling price = gain or loss.
this
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Old 02-20-2019, 04:31 AM
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Originally Posted by LongIslandFisherman View Post
Original cost plus capital improvements less depreciation for 8 years = adjusted basis less net selling price = gain or loss.
rental property ... minus net rental Income?
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Old 02-20-2019, 04:34 AM
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^ Rental Income is not factored here. That will be on schedule E, the sale of the asset for a Capital gain or loss will be on schedule D

LIF has the equation for the capital gain(loss).
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Old 02-20-2019, 04:46 AM
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Appreciate the feedback. Taxes/accounting are def not my areas of expertise
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Old 02-20-2019, 05:32 AM
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Originally Posted by tprice View Post
You have to recapture depreciation as well
If the OP would have moved back into that house, would that still apply?
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Old 02-20-2019, 05:40 AM
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Originally Posted by mikeloew View Post
If the OP would have moved back into that house, would that still apply?
still have depreciation recapture AND gains allocable to periods where it was a rental property are not eligible for exclusion.

https://www.law.cornell.edu/uscode/text/26/121
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Old 02-20-2019, 06:39 AM
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Originally Posted by BACKTOTHESEA View Post

still have depreciation recapture AND gains allocable to periods where it was a rental property are not eligible for exclusion.

https://www.law.cornell.edu/uscode/text/26/121
Nice easy reading there!
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Old 02-20-2019, 06:42 AM
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To the CPA's who have responded, a quick question.

Do you guys still use the modern equivalent of the PPC Guides? I used to like using their worksheets for issues like this.
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Old 02-20-2019, 06:44 AM
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Originally Posted by Sprockets View Post
Nice easy reading there!
Yeah, I guess I could have pointed out sub section (b)(5) and (d)(6). as the pertinent sections.
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Old 02-20-2019, 06:47 AM
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I suspect maybe the OP didn't depreciate.
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Old 02-20-2019, 09:07 AM
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Originally Posted by airbrush View Post
I suspect maybe the OP didn't depreciate.
why would you suspect that?
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Old 02-20-2019, 10:51 AM
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I suspect maybe the OP didn't depreciate
Doesn't matter. It's allowed or allowable. If he didn't claim, you can in the final year. See an expert.
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