Have a Tax Question? Ask a Tax Expert
Thank you for contacting me about your Tax issue. I will work hard to help you understand the issue clearly.
I will not be able to help with the software or the form specifically, but let's go through the facts and see how this should work out in a general sense. Perhaps that will give you an idea how to fill out the form.
First of all, can you give some brief details of the transaction.
Original property: What is the original cost basis and how much depreciation was reported since purchase?
What was the "sale": price if the first property?
I sold a rental,multi-family house, which I purchased for $22,250 on January 1st,1991 and sold it on September 27,2012 for $225,768. After 21 years of depreciation, the remaining depreciation is around $4000. The cost of the sale(commission,closing costs,etc.)were$23,537. Within 45 days, on October 9th,2012, I purchased a condo for $115,379, for which I paid cash. The 1031 agency handling the sale and purchase charged me $875 and told me the capital gains for this long-term sale would be 15% of $86,852 tot
OK, so based on this: Your ADJUSTED basis was 27537.
your total gain was about 98K
You purchased the condo 115379 of which 27537 was original basis and 87842 was deferred gain.
Since we already know I owe 15% of $86,852 plus my other income, I should be able to fill in the other blanks on the 8824, but I can't seem to fit those numbers into the spaces given.
Sorry bad calc...the TOTAL gain was 198K, not 98K
The cash taken out was about 110,158 NOT 86K
This is the correct taxable portion.
Are you saying I am responsible for paying capital gains tax on $198,000? That some of that, mainly $112,000 will not be deferred?
I am verifying my figures now
If you're right, that agency is incorrect in telling me I must pay all of the proceeds in this tax year and cannot defer any of the proceeds
My numbers above are correct.
Note that I stated that the cash taken out was about 110K. THis IS the gain
(It is not 198K or 86K)
THe deferred gain is about 87K, as I stated above
What happens is that all your original basis, PLUS the selling expenses goes into the new property
Also, the gain goes into the new property, but combined it can only be the 115K
OK. Well, I am sorry that you do not agree.
Have a good evening and good luck with your transaction.
just so you are aware, 18K of this transaction is subject to ordinary tax because it is considered recapture of depreciation.
PLease provide a positive feedback and rating when you determine that this information is correct.