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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12471
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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I have agreed to a buyout of my rent stabilized NYC apt lease

Resolved Question:

I have agreed to a buyout of my rent stabilized NYC apt lease by my landlord. I have lived there for 42 years. Is it treated as capitol gains, and if so what would the basis be, or is it ordinary in\come
Submitted: 9 months ago.
Category: Tax
Expert:  Megan C replied 9 months ago.

Megan C :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

Megan C :

How are you doing today?

Megan C :

There's no concrete guidance, such as a form I can point you to from the IRS which explicitly states that this is a capital asset, however the general consensus is that a lease buyout such as this is treated as capital gains.

Megan C :

Under present law, a rent stabilized tenant is able to renew his/her lease indefinitely as long as they are in compliance with lease terms, because of this, the entitlement is considered a property right, which is a capital asset.

Megan C :

Martin B Miller, a Manhattan tax lawyer, agrees with this position.

Megan C :

You can read more about this, HERE

Megan C :

Your basis in this asset is 0, because you did not pay upfront for this property right.

Megan C :

Please let me know if you need anything additional. If not, please rate as "excellent" so that I may receive credit for assisting you today

Customer:

Does the State view it the same way as the IRS would

Megan C :

Yes, the state would view it the same way

Customer:

Thank you very much

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12471
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and other Tax Specialists are ready to help you
Expert:  Megan C replied 9 months ago.
Thanks, June for your positive rating. Please come back and visit me any time you have a question. It was a pleasure working with you today.

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