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emc011075
emc011075, Master Tax Adviser
Category: Capital Gains and Losses
Satisfied Customers: 2427
Experience:  Master Tax Adviser and Enrolled Agent
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HOW DO P HANDLE PROPERTY THAT WAS RENTED 22 YEARS IDLE TWO

Customer Question

HOW DO P HANDLE PROPERTY THAT WAS RENTED FOR APPROX 22 YEARS IDLE FOR THE TWO YEARS I PLAN TO SELL PROPERTY HOW CAN I AVOID CAPITAL GAINS DONATE HOUSE NOT PROPERTY TO LOCAL FIRE DEPT FOR TRAINING? BUY NEW PROP WITH DOLLARS FROM THIS SALE AND LIVE IN NEW PROP FOR 2 YEARS?
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

Several issues here. If you rented the property for 22 years your basis (investment minus depreciation) is very low which means most of your "capital gains" are actually depreciation recapture, not capital gains.

Now, for tax purposes a donation is a gift given to a qualified organization. To be a qualified donation you will have to give up all rights to the property without receiving anything in return. You cannot "donate" the house but not the property and than sell the property. And even if this would somehow worked out, reinvesting the proceeds into a new personal property will not protect you from the depreciation recapture or capital gains. You would have to re-invest the proceeds into a new business/rental property to deffer, but not eliminate, capital gains.

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

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