loss on sale of rental.

[peterk2001]

Quick question…If one has a loss on a rental property, does one still have to recapture the depreciation??? Or do you just add the depreciated value (times 25%) to the original cost, then if it is less than the original price, you have a loss?????

thanks

[bsrsharma]

I think you may be better off with some professional advice on complex commercial transactions like that.

[bsrsharma]

I think you may be better off with some professional advice on complex commercial transactions like that.

[bsrsharma]

I think you may be better off with some professional advice on complex commercial transactions like that.

[SD Realtor]

My advice is go ask a tax professional…

My unofficial advice would be to run through an example.

Lets say you bought a property for 300k. Let’s say you owned it for 5 years and you depreciated it say 3k per year. So after 5 years you have a total of 15k to recapture. Your new basis is essentially 285k. So whatever you sell the home for whether it is 350k or 250k, you need to use that adjusted basis to perform your gain or loss.

Again, verify this with your tax professional.

SD Realtor

[SD Realtor]

My advice is go ask a tax professional…

My unofficial advice would be to run through an example.

Lets say you bought a property for 300k. Let’s say you owned it for 5 years and you depreciated it say 3k per year. So after 5 years you have a total of 15k to recapture. Your new basis is essentially 285k. So whatever you sell the home for whether it is 350k or 250k, you need to use that adjusted basis to perform your gain or loss.

Again, verify this with your tax professional.

SD Realtor

[SD Realtor]

My advice is go ask a tax professional…

My unofficial advice would be to run through an example.

Lets say you bought a property for 300k. Let’s say you owned it for 5 years and you depreciated it say 3k per year. So after 5 years you have a total of 15k to recapture. Your new basis is essentially 285k. So whatever you sell the home for whether it is 350k or 250k, you need to use that adjusted basis to perform your gain or loss.

Again, verify this with your tax professional.

SD Realtor

[peterk2001]

thanks for the info…

[peterk2001]

thanks for the info…

[peterk2001]

thanks for the info…

[(former)FormerSanDiegan]

You have to recapture depreciation regardless of gain or loss on the property. The reason is that you were able to either deduct the depreciation against income (either in each you you applied it or any remaining carryover loss when you sell).

Federal tax on recapture is 25%. State is whatever your tax rate happens to be (likely near the max of 9.3%). Hopefully your federal tax break you received previously due to depreciation was at least 25%.

Yes, you do reduce the cost basis by the amount depreciated as SD R wrote above.

So, to expand on the example, you’d have to pay the FED’s 0.25*15000 = 3750 in depreciation recapture tax. You’d have to pay CA up to 0.093*15000 = 1395.

[(former)FormerSanDiegan]

You have to recapture depreciation regardless of gain or loss on the property. The reason is that you were able to either deduct the depreciation against income (either in each you you applied it or any remaining carryover loss when you sell).

Federal tax on recapture is 25%. State is whatever your tax rate happens to be (likely near the max of 9.3%). Hopefully your federal tax break you received previously due to depreciation was at least 25%.

Yes, you do reduce the cost basis by the amount depreciated as SD R wrote above.

So, to expand on the example, you’d have to pay the FED’s 0.25*15000 = 3750 in depreciation recapture tax. You’d have to pay CA up to 0.093*15000 = 1395.

[(former)FormerSanDiegan]

You have to recapture depreciation regardless of gain or loss on the property. The reason is that you were able to either deduct the depreciation against income (either in each you you applied it or any remaining carryover loss when you sell).

Federal tax on recapture is 25%. State is whatever your tax rate happens to be (likely near the max of 9.3%). Hopefully your federal tax break you received previously due to depreciation was at least 25%.

Yes, you do reduce the cost basis by the amount depreciated as SD R wrote above.

So, to expand on the example, you’d have to pay the FED’s 0.25*15000 = 3750 in depreciation recapture tax. You’d have to pay CA up to 0.093*15000 = 1395.

[Author]

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