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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
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Experience:  Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
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Hi We sold a rental property house in Costa Rica, July 2012

Resolved Question:

Hi We sold a rental property house in Costa Rica, July 2012 for 200,000 dollars. Original price in 2006 was 204,000, 130,000 allocated to structure and 74,000 to land. Over the course of these 6 years, I have claimed 30,305 in depreciation, while all improvements we claimed over the years as expenses. We paid half the closing costs and our realtors fee of 5%, plus attorney fees, bank fees (to wire the money to our bank here) etc. and that comes to $13,284. Can all these be considered as part of the "expense of sale" on form 4797 and can we include travel expenses to get to and from the closing in Samara, Costa Rica (which ended up being $2021.76 not counting meals)? Basically could somebody walk us through form 4797 for capital gains?
Submitted: 1 year ago.
Category: Tax
Expert:  taxmanrog replied 1 year ago.

Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!

 

You are allowed to deduct any expenses that are required to close on the building. These would include the realtor's commission, the legal fees, any title costs, any stamp taxes or transfer taxes, the bank fees, any courier fees (FedEx, etc.), title insurance, travel fees, etc.

 

One question that I do have is how you deducted over $30k over 6 years on a property costing $130k? What life did you use? For residential property located outside of the United States, you are supposed to use a straight line method, over a 40 year life. This would only give you about $20k.

 

I put your information into my tax program and printed a PDF of the Form 4797. I made some assumptions about date purchased and sold.

 

Attachment: 2013-09-25_010000_form_4797_for_justansw.pdf

 

Thanks again!

 

Roger

taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 418
Experience: Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
taxmanrog and 5 other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Hi, sorry to get back to you so late. Got pulled away. I'm very thankful for the form 4797. It's a little confusing to me how you got the 16k plus loss in the first part and then the numbers in the second part.

Expert:  taxmanrog replied 1 year ago.

You actually do Form 4797, Page 2 first (that is the 3rd page of the attachment). The $16k loss is for AMT purposes only. You can omit that page, as I didn't have the AMT depreciation that you used in prior years when I calculated the Form 4797. The only pages you need to look at are the first and last pages (the regular Form 4797, pages 1 & 2).

 

The numbers you calculate on the second page are carried to the first page.

 

Thanks! If you have any more questions, please let me know. If you have found my answer helpful, please rate me highly! I would appreciate that!

 

Have a great week!

 

Roger

Customer: replied 1 year ago.

Okay, thank you. I'll look at the numbers closer (I am a bit brain-tired this late) and I think I'll understand them when I put it all together. have a great week yourself.

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