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emc011075
emc011075, Master Tax Adviser
Category: Capital Gains and Losses
Satisfied Customers: 2317
Experience:  Master Tax Adviser and Enrolled Agent
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If I carry the note on the sale of investment real estate,

Customer Question

If I carry the note on the sale of investment real estate, do I pay capital gains on the profit at point of sale, or only on income generated per year?
Submitted: 5 months ago.
Category: Capital Gains and Losses
Expert:  emc011075 replied 5 months ago.

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

Installment sale, as long as properly arranged and documented, is an option to spread capital gains reporting over several years. Each payment will be broken down into gain, principle and interest. Each year you will report partial capital gains (Schedule D) and interest (Schedule B).

Just be careful about the depreciation. Under the depreciation recapture rules the depreciation is added back to your income in the year of the sale. Check with your tax adviser how much of the capital gains would be treated as depreciation and not as capital gains.

Expert:  emc011075 replied 5 months ago.

I see you offline now. So if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

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