topic What are the tax implications of selling a rental condo? in Investors & landlords

What are the tax implications of selling a rental condo?

yesca — Tue, 04 Jun 2019 19:09:52 GMT

You will pay taxes on any gain realized over your cost ba...

Carl — Tue, 04 Jun 2019 19:09:53 GMT

You will pay taxes on any gain realized over your cost basis if sold at a gain. Part of that taxable gain will be the total of all the depreciation you have been required to take for the years it was a rental. In the year you sell, depreciation is recaptured and taxed.
If you sell at a loss, then your losses will be deductible from other ordinary income. But it's doubtful you will see at a loss, even if you sell for less than you paid for it. That's because your cost basis is reduced by the amount of depreciation taken over the years.

thank you for your time sir. where do i look on my tax r...

yesca — Tue, 04 Jun 2019 19:09:55 GMT

thank you for your time sir. where do i look on my tax return to see what depreciation i deducted? thx in advance

That's on the IRS Form 4562 titled "Amortization and Depr...

Carl — Tue, 04 Jun 2019 19:09:56 GMT

That's on the IRS Form 4562 titled "Amortization and Deprecation Report" for that one specific property. It will show you the total of all depreciation taken in prior years, and another column for the current year's depreciation being taken. Add the two together to get the total depreciation you will be required to recapture in the year you sell the property.

thx i appreciate your time

yesca — Tue, 04 Jun 2019 19:09:58 GMT

thx i appreciate your time

If I don’t remember the year I purchased the rental prope...

DPaul — Tue, 04 Jun 2019 19:09:59 GMT

If I don’t remember the year I purchased the rental property, how would I collect the year I purchased it?

What else will I need when filing taxes when selling my i...

DPaul — Tue, 04 Jun 2019 19:10:00 GMT

What else will I need when filing taxes when selling my investment property in 2018?

I would 'HIGHLY" "HIGHLY" suggest you seek legal help. No...

Carl — Tue, 04 Jun 2019 19:10:02 GMT

I would 'HIGHLY" "HIGHLY" suggest you seek legal help. Now you can get the purchase information from the lender, as they will have a copy of the HUD-1 closing statement you signed at the closing when you purchased it. Otherwise, you may be able to get what you need from your county tax office where the sale was recorded. But if you're having to ask about this, then I wonder what other information you don't have and don't know you need. Understand that if you screw this up, the IRS will screw *you* up with all kinds of fines, penalties, back taxes and interest. It will make the cost of professional help seem like a pittance in comparison and the 20/20 hindsight will not help you.

If you will be selling the property in 2018, at this poin...

Carl — Tue, 04 Jun 2019 19:10:03 GMT

If you will be selling the property in 2018, at this point I can only assume the below will apply and be helpful to you for correctly reporting the sale. But who knows what may change in the program, with all the massive changes in tax law for 2018.

Reporting the Sale of Rental Property

If you qualify for the "lived in 2 of last 5 years" capital gains exclusion, then when prompted you WILL indicate that this sale DOES INCLUDE the sale of your main home. For AD MIL personnel who don't qualify because of PCS orders, select this option anyway, because you "MIGHT" qualify for at last a partial exclusion.

Start working through Rental & Royalty Income (SCH E) "AS IF" you did not sell the property. One of the screens near the start will ahve a selection on it for "I sold or otherwise disposed of this property in 2017". Select it. After you select the "I sold or otherwise disposed of this property in 2017" you continue working it through "as if" you still own it. When you come to the summary screen you will enter all of your rental income and expenses, even it it's zero. Then you MUST work through the "Sale of Assets/Depreciation" section. You must work through each individual asset one at a time to report its disposition (in your case, all your rental assets were sold).

Understand that if more than the property itself is listed in your assets list, then you need to allocate your sales price across all of your assets. You will only allocate the structure sales price; you will NOT allocate the land sales price, since the land is not a depreciable asset. Then if you sold this rental at a gain, you must show a gain on all assets, even if that gain is $1. Likewise if you sold at a loss then you must show a loss on all assets, even if that loss is $1

Basically when working through an asset you select the option for "I stopped using this asset in 2017" and go from there. Note that you MUST do this for EACH AND EVERY asset listed.

When you finish working through everything listed in the assets section, if you ever at any time you owned this rental you claimed vehicle expenses, then you must also work through the vehicle section and show the disposition of the vehicle. Most likely, your vehicle disposition will be "removed for personal use", as I seriously doubt you sold your vehicle as a part of this rental sale.