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Phillip B, EA
Phillip B, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 704
Experience:  Practicing since 2004. Expert in 1040, small business, represent vs. IRS, & int'l tax mattters.
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I purchased investment property with a second from my primary

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I purchased investment property with a second from my primary home, I sold the property and need to know what options I have to minimize the tax impact. Can I use the proceeds to pay off the second and put the remainder against my first mortgage and not be taxed ?

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Unfortunately, if the sale has happened it is probably too late to do anything about the tax implications.


You could have done a section 1031 exchange (have a third party by a new investment property with the proceeds of the sale) if you would have planned things out prior to the sale. However, once you received a check or cash from proceeds on the sale, the gain in irreversibly taxable.


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Customer: replied 3 years ago.

The gains , what can I write off ?

The gain is calculated by taking the total sales price less the purchase price of the investment property and any improvements or additions from the property (the cost basis). You can deduct any money you spent improving or maintaining the property that wasn't otherwise deducted (for example, almost any expense incurred and paid on the property could be included in the cost basis if the expense was not also deducted as a rental or business expenses).

Let me know if this helps.
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