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Sandi Hargrove, SkyHawks
Sandi Hargrove, SkyHawks, Master Tax Advisor, Enrolled Agent
Category: Tax
Satisfied Customers: 1257
Experience:  I am a Master Tax Advisor and Enrolled Agent. I have 40 years experience. Trucking specialist.
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capital gains

Customer Question

can refer back to this .........Edited by chris21 on May 27 2005 at 9:03pm
Please tell me how much capital gains i will have to pay.
I inherited 1/7th of this house. So i should not of to pay taxes on 1/7th. That is what i have been told.
Then i bought my siblings out for 54,26.00 in 1995.
I have had it as a rental.
Now its in escrow Sale price is 235,000.
With all expenses so far going out My net will be 191,760.83
Since i have had the house for 10 years i have had lots of repairs through the years.
Estimated guess about 10,000. Not sure if i supposed to count that.

Please give me the amount i will have to pay capital gains.
I`m not planning on investing in any more property.

Thank you
Ruth


Submitted: 11 years ago.
Category: Tax
Expert:  Dr WLS replied 11 years ago.
While you have been renting it out, have you been depreciating it and using Schedule E to compute your annual operating gain or loss? This will make a big difference in your capital gain. You could have been deducting maintenance and repair cost from income all those years if you used Schedule E, declaring the rental income minus operating expenses and depreciation. You can't deduct repair and maintenance cost from capital gain, only improvement expense.
Customer: replied 11 years ago.
Reply to Dr WLS's Post: I have been deducting maintenance and repair cost each year at tax time.
Thank you for the free reply but i still need more answers to my question.
Expert:  Dr WLS replied 11 years ago.
Thank you for answering my inquiry. I would like other experts to help out on this one. I am not certain that I can answer it correctly. You can probably expect an answer in 24 hours from someone else.
Expert:  Tammy replied 11 years ago.

The customer would like more answers on this topic. If you are qualified and know the answer, feel free to respond.


Expert:  Sandi Hargrove, SkyHawks replied 11 years ago.

You must begin with your basis. This is the fair market value of the home on the date of death divided by 7. Add to this the amount you paid your siblings. Now add any capital improvements after you inherited the property(1/7 of the capital improvements prior to you buying out your siblings and 100% of capital improvements afterward). Subtract the depreciation allowed(or allowable even if you claimed less) while you used the property for rental/business. Add to this the expenses of the sale. This is your adjusted basis.


Capital improvements are those that are not deducted each year, but are deducted over several years because they are not merely maintenance or repairs.


IRS will allow you to deduct an expense only once, but capital improvements are deducted over a longer period.


To calculate your capital gain amount, I would need the basis when you inherited the house, the amount of depreciation allowed/allowable and the amount of capital improvements.

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