The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: slappy on June 30, 2017, 06:34:21 AM
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I sold my rental property in March of this year. I bought it on 10/26/07 for $70,900 and sold it for $59k. From what I can tell from Turbo Tax, the depreciation amount was $17852 for the past 10 years. How will this impact my taxes next year? I guess I'll still need to claim the income from Jan and Feb, but how will the sale affect things?
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You will have capital gains, and you pay tax on them. 17,852 + 59K = 76,852.
76,852 - 70,900 = 5,952.
You have $5,952 in gains.
If my math is right.
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You will have capital gains, and you pay tax on them. 17,852 + 59K = 76,852.
76,852 - 70,900 = 5,952.
You have $5,952 in gains.
If my math is right.
Wow, I am just seeing this now. Thank you for your response! That's about what I thought, too.
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You may need to include passive suspended losses accumulated over the years in your calculations... these could shelter your gain and even create a lost.
Check the form 8582 from last year's tax return to see if these exist...
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You may need to include passive suspended losses accumulated over the years in your calculations... these could shelter your gain and even create a lost.
Check the form 8582 from last year's tax return to see if these exist...
Thanks. There is nothing there. However, is it true that my capital gains tax rate is 0 because I am in the 15% tax bracket? AGI last year was $63k, MFJ. Does that mean I actually wouldn't owe any taxes?
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You may need to include passive suspended losses accumulated over the years in your calculations... these could shelter your gain and even create a lost.
Check the form 8582 from last year's tax return to see if these exist...
Thanks. There is nothing there. However, is it true that my capital gains tax rate is 0 because I am in the 15% tax bracket? AGI last year was $63k, MFJ. Does that mean I actually wouldn't owe any taxes?
That is correct! One of the benefits of long term capital gains income when you're in the 10% or 15% tax bracket.
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Well that is great news! Thank you all for the help! :)
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You'll want to check with a tax guy but I have unfortunate news.
The amount you "made" on the rental seems like it is subject to depreciation recapture, which doesn't follow the rules of capital gains taxes.
The more I read about it the more it seems it is taxed as income in the year you sell? (seems strange)
Seems like it is capped at 25% so even if you were in a higher tax bracket it wouldn't be taxed more than that
https://www.irs.gov/publications/p544/ch03.html#en_US_2016_publink100072556
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You'll want to check with a tax guy but I have unfortunate news.
The amount you "made" on the rental seems like it is subject to depreciation recapture, which doesn't follow the rules of capital gains taxes.
The more I read about it the more it seems it is taxed as income in the year you sell? (seems strange)
Seems like it is capped at 25% so even if you were in a higher tax bracket it wouldn't be taxed more than that
https://www.irs.gov/publications/p544/ch03.html#en_US_2016_publink100072556
Well that is interesting. Technically I sold the property for a loss. The only gain would be because of the depreciation recapture. I wonder if that makes a difference.
Edit: So I bought for $70k and sold for $59k. By the way that is worded, it makes me wonder if it only applies if I had sold for over $70k, thereby incurring an actual gain.