- This topic has 25 replies, 4 voices, and was last updated 16 years, 4 months ago by kismetsdad.
-
AuthorPosts
-
November 27, 2007 at 11:37 PM #11006November 28, 2007 at 6:29 AM #1041374plexownerParticipant
Too many details for me – I turned my taxes over to my CPA when my return grew beyond 12 pages
If he is anywhere close to income levels that bring AMT into play his CPA needs to consider the AMT ramifications of any equity recapture
Choosing to close in 2008 vs 2007 gives him more time to plan his tax strategies
Easy question for a tax specialist: can a carry forward loss from equities be applied against capital gains from real estate?
Get this guy to his CPA quick with some real numbers to crunch!
November 28, 2007 at 6:29 AM #1042214plexownerParticipantToo many details for me – I turned my taxes over to my CPA when my return grew beyond 12 pages
If he is anywhere close to income levels that bring AMT into play his CPA needs to consider the AMT ramifications of any equity recapture
Choosing to close in 2008 vs 2007 gives him more time to plan his tax strategies
Easy question for a tax specialist: can a carry forward loss from equities be applied against capital gains from real estate?
Get this guy to his CPA quick with some real numbers to crunch!
November 28, 2007 at 6:29 AM #1042344plexownerParticipantToo many details for me – I turned my taxes over to my CPA when my return grew beyond 12 pages
If he is anywhere close to income levels that bring AMT into play his CPA needs to consider the AMT ramifications of any equity recapture
Choosing to close in 2008 vs 2007 gives him more time to plan his tax strategies
Easy question for a tax specialist: can a carry forward loss from equities be applied against capital gains from real estate?
Get this guy to his CPA quick with some real numbers to crunch!
November 28, 2007 at 6:29 AM #1042604plexownerParticipantToo many details for me – I turned my taxes over to my CPA when my return grew beyond 12 pages
If he is anywhere close to income levels that bring AMT into play his CPA needs to consider the AMT ramifications of any equity recapture
Choosing to close in 2008 vs 2007 gives him more time to plan his tax strategies
Easy question for a tax specialist: can a carry forward loss from equities be applied against capital gains from real estate?
Get this guy to his CPA quick with some real numbers to crunch!
November 28, 2007 at 6:29 AM #1042784plexownerParticipantToo many details for me – I turned my taxes over to my CPA when my return grew beyond 12 pages
If he is anywhere close to income levels that bring AMT into play his CPA needs to consider the AMT ramifications of any equity recapture
Choosing to close in 2008 vs 2007 gives him more time to plan his tax strategies
Easy question for a tax specialist: can a carry forward loss from equities be applied against capital gains from real estate?
Get this guy to his CPA quick with some real numbers to crunch!
November 28, 2007 at 8:59 AM #104251(former)FormerSanDieganParticipantThis is a tricky one. Some general guidance below, but I also recommend getting a tax advisor to crunch the numbers for your exact situation. It’s been over 5 years since I sold a rental.
Plus there may be other factors, such as phase outs, AMT, etc that come into play. Also, note that some rules were changed over the years. If this has been a rental longer than about 10 years there may be substantial differences in depreciation rules, etc that were grandfathered into the law.First, the basics …
Capital Gain on the property is:
Sales price minus the following:
a) selling costs, including commission, etc
b) Cost BasisCost Basis is the original cost of the property, plus any improvements, minus depreciation.
The tax on the gain is then split into two parts: Depreciation recapture and capital gains. The amount of the gain that is due to depreciation recapture is taxed as ordinary income up to a maximum rate (I believe it is 25%, used to be 28%). The capital gains is taxed at cap gains tax rates (typically 15% for long-term gain).
The issue of offsetting capital gains with capital losses is straightforward for the capital gains on property. He can apply this against other capital losses. Since the portion that is due to depreciation recapture is technically considered ordinary income I am fairly certain that he cannot use this to offset capital losses.
November 28, 2007 at 8:59 AM #104337(former)FormerSanDieganParticipantThis is a tricky one. Some general guidance below, but I also recommend getting a tax advisor to crunch the numbers for your exact situation. It’s been over 5 years since I sold a rental.
Plus there may be other factors, such as phase outs, AMT, etc that come into play. Also, note that some rules were changed over the years. If this has been a rental longer than about 10 years there may be substantial differences in depreciation rules, etc that were grandfathered into the law.First, the basics …
Capital Gain on the property is:
Sales price minus the following:
a) selling costs, including commission, etc
b) Cost BasisCost Basis is the original cost of the property, plus any improvements, minus depreciation.
The tax on the gain is then split into two parts: Depreciation recapture and capital gains. The amount of the gain that is due to depreciation recapture is taxed as ordinary income up to a maximum rate (I believe it is 25%, used to be 28%). The capital gains is taxed at cap gains tax rates (typically 15% for long-term gain).
The issue of offsetting capital gains with capital losses is straightforward for the capital gains on property. He can apply this against other capital losses. Since the portion that is due to depreciation recapture is technically considered ordinary income I am fairly certain that he cannot use this to offset capital losses.
November 28, 2007 at 8:59 AM #104347(former)FormerSanDieganParticipantThis is a tricky one. Some general guidance below, but I also recommend getting a tax advisor to crunch the numbers for your exact situation. It’s been over 5 years since I sold a rental.
Plus there may be other factors, such as phase outs, AMT, etc that come into play. Also, note that some rules were changed over the years. If this has been a rental longer than about 10 years there may be substantial differences in depreciation rules, etc that were grandfathered into the law.First, the basics …
Capital Gain on the property is:
Sales price minus the following:
a) selling costs, including commission, etc
b) Cost BasisCost Basis is the original cost of the property, plus any improvements, minus depreciation.
The tax on the gain is then split into two parts: Depreciation recapture and capital gains. The amount of the gain that is due to depreciation recapture is taxed as ordinary income up to a maximum rate (I believe it is 25%, used to be 28%). The capital gains is taxed at cap gains tax rates (typically 15% for long-term gain).
The issue of offsetting capital gains with capital losses is straightforward for the capital gains on property. He can apply this against other capital losses. Since the portion that is due to depreciation recapture is technically considered ordinary income I am fairly certain that he cannot use this to offset capital losses.
November 28, 2007 at 8:59 AM #104375(former)FormerSanDieganParticipantThis is a tricky one. Some general guidance below, but I also recommend getting a tax advisor to crunch the numbers for your exact situation. It’s been over 5 years since I sold a rental.
Plus there may be other factors, such as phase outs, AMT, etc that come into play. Also, note that some rules were changed over the years. If this has been a rental longer than about 10 years there may be substantial differences in depreciation rules, etc that were grandfathered into the law.First, the basics …
Capital Gain on the property is:
Sales price minus the following:
a) selling costs, including commission, etc
b) Cost BasisCost Basis is the original cost of the property, plus any improvements, minus depreciation.
The tax on the gain is then split into two parts: Depreciation recapture and capital gains. The amount of the gain that is due to depreciation recapture is taxed as ordinary income up to a maximum rate (I believe it is 25%, used to be 28%). The capital gains is taxed at cap gains tax rates (typically 15% for long-term gain).
The issue of offsetting capital gains with capital losses is straightforward for the capital gains on property. He can apply this against other capital losses. Since the portion that is due to depreciation recapture is technically considered ordinary income I am fairly certain that he cannot use this to offset capital losses.
November 28, 2007 at 8:59 AM #104392(former)FormerSanDieganParticipantThis is a tricky one. Some general guidance below, but I also recommend getting a tax advisor to crunch the numbers for your exact situation. It’s been over 5 years since I sold a rental.
Plus there may be other factors, such as phase outs, AMT, etc that come into play. Also, note that some rules were changed over the years. If this has been a rental longer than about 10 years there may be substantial differences in depreciation rules, etc that were grandfathered into the law.First, the basics …
Capital Gain on the property is:
Sales price minus the following:
a) selling costs, including commission, etc
b) Cost BasisCost Basis is the original cost of the property, plus any improvements, minus depreciation.
The tax on the gain is then split into two parts: Depreciation recapture and capital gains. The amount of the gain that is due to depreciation recapture is taxed as ordinary income up to a maximum rate (I believe it is 25%, used to be 28%). The capital gains is taxed at cap gains tax rates (typically 15% for long-term gain).
The issue of offsetting capital gains with capital losses is straightforward for the capital gains on property. He can apply this against other capital losses. Since the portion that is due to depreciation recapture is technically considered ordinary income I am fairly certain that he cannot use this to offset capital losses.
November 28, 2007 at 9:30 AM #104276SD RealtorParticipantThanks guys –
FSD are you sure you are not an accountant in sheeps clothing? Damn you nailed it… I am actually surprised as I got it correct as well but did not know what rate the depreciation recapture would be taxed at but it makes sense that it is ordinary income and it makes absolute sense that it cannot be offset by carry forward cap gains loss.
Great help and yes he is working with his cpa of course.
SD Realtor
November 28, 2007 at 9:30 AM #104363SD RealtorParticipantThanks guys –
FSD are you sure you are not an accountant in sheeps clothing? Damn you nailed it… I am actually surprised as I got it correct as well but did not know what rate the depreciation recapture would be taxed at but it makes sense that it is ordinary income and it makes absolute sense that it cannot be offset by carry forward cap gains loss.
Great help and yes he is working with his cpa of course.
SD Realtor
November 28, 2007 at 9:30 AM #104374SD RealtorParticipantThanks guys –
FSD are you sure you are not an accountant in sheeps clothing? Damn you nailed it… I am actually surprised as I got it correct as well but did not know what rate the depreciation recapture would be taxed at but it makes sense that it is ordinary income and it makes absolute sense that it cannot be offset by carry forward cap gains loss.
Great help and yes he is working with his cpa of course.
SD Realtor
November 28, 2007 at 9:30 AM #104400SD RealtorParticipantThanks guys –
FSD are you sure you are not an accountant in sheeps clothing? Damn you nailed it… I am actually surprised as I got it correct as well but did not know what rate the depreciation recapture would be taxed at but it makes sense that it is ordinary income and it makes absolute sense that it cannot be offset by carry forward cap gains loss.
Great help and yes he is working with his cpa of course.
SD Realtor
-
AuthorPosts
- You must be logged in to reply to this topic.