Author Topic: Another LT Capital Gains Question - Rental Home Sale  (Read 613 times)

Rollin

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Another LT Capital Gains Question - Rental Home Sale
« on: June 16, 2016, 12:43:05 PM »
Here are the numbers on a contract sale of my rental home:

original purchase price - $70,604
recapture/depreciation - $50,454 (ouch at 25% tax)
possible sale price used in my discussion - $175,000
down payment of $20,000
five year balloon ~ $119,000
Principle payments in the 5 years ~$36,000

That means that during the five years the buyer has paid off a little over $36,000, or $56,000 with payments plus down payment.

My question is - what number do I use for determination of my (possible) capital gains tax in the 5th year (in addition to the mortgage payments that same year)? Is it:

$175,000-$70,604 = $104,396, which ignores the spreading out during the interim 5 years, or
$119,000, which seems most likely, or
$119,000 - $70,604 = $48,400, idunno, I'm just wondering on this one?

I'm seeing a CPA next week, but looking to draft the final sales contract this week and the answer earlier would be helpful.

Thank you.