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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11381
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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How affect on Tax Return, if individual bought several properties

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How affect on Tax Return, if individual bought several properties (apartments, houses), but not sold it in the same year? Is it expenses or investment? What form have to fill for Tax Return. Spouse has a Real State license.

NPVAdvisor :

Hi,

NPVAdvisor :

Yes, the maintenance and upkeep, for example, would be expenses deducted on schedule E as rental expense and will lower your income BUT

NPVAdvisor :

the sale of the properties would either be long or short term capital goins, using the investment (plus improvements) as basis and sales price net of selling expensew as the proceeds of sale

Customer:

Hello,

NPVAdvisor :

HI - Yes ... Whether you held a year or more will dictate whether it's short or long terms gain.... and the tax year you sell in dictates the year you report it

Customer:

You think if properties were bought and weren't sold, so its no report in Tax Return for that period?

NPVAdvisor :

That's right no CAPITAL GAINS reporting ... that would only be reported in the year you sell (the year you have a capital gain) ... (If you rented these properties, however, you might have some rental expenses that were incurred during the tax year, ... along with some rental income if you did have them rented) but there is never any gain to report until you sell them (becuse you don't yet know what the sales price is)

Customer:

Thank you. For sure: I can't show buying as an investment expenses now ( without selling)?

NPVAdvisor :

That's correct ... your investment (plus any improvements you made to the property) will be your BASIS ... and then your sales price (minus any selling costs like commissions) will be the PROCEEDS OF SALE .... then in the year you sell it the ( GAIN = PROCEEDS OF SALE - BASIS)

Customer:

Thank you . It is helpful!

NPVAdvisor :

You're very welcome

NPVAdvisor :

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