Randalltax : Thanks for asking today.
Randalltax : Ton get an accurate idea of the gain, more info is needed about both properties, particularly the depreciation.
Randalltax : Depreciation reduces the basis. In order to compute depreciation, if you don't have that number, then the dates of all purchases and xchanges needs o be known, as well as the amount of each purchase attributed to land vs building.
Randalltax : Also, were these both commercial, or was one residential?
Both were commercial. The strip center was bought in 1997 and sold in 2004 . The land was sold in 2009. There was no breakdown on the sale of the strip center regarding building and land. All was valued as one for 350,000 on purchase and 420,000 on sale . I dont have the depreciation numbers but while it was owed by the current party they did take advantage of depreciation. The property when it was purchased was 5 years old. The size of the property was approximately 8000 SQF. When the land was acquired , it was kept barren
Randalltax : I don't understand. The first property was bought in 1997. But I don't understand the 2004 and 2009 dates.
Randalltax : Did you exchange in 2004?
Randalltax : Is this last transaction 3 years ago and not recently? Customer:
yes the exchange took place in 2004 and the last transaction took place in 2009
Randalltax r u there
Randalltax : I can give you a rough estimate only because of lack of detail in the facts. I am also understanding that the second property was undeveloped land. I will use an 80% factor for building and 20% land on first one.
Yes, i realize that you are working with inaccurate figures
Randalltax : The depreciation is estimated at 50k
Randalltax : Therefore original basis at 350k minus 50k, so new property basis at 300k plus 130k added or 430k total
Randalltax : 815 minus 430 equals 385k cap gain at 15% tax rate plus 50k recapture at 25% tax rate.
Thanks , but if they dont have other source of income in both 2004 and 2007, dont you get an exmeption of 69,000 if tax is filed jointly . They are not US citizens and dont have any other sources of income in the united states
also how did come to the 130 K figure
Sorry i know where you are getting the 130 K figure