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Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 2855
Experience:  18+ years of experience in tax preparation; 25+ years of experience as a real estate/corporate paralegal.
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I am trying to estimate the tax liability for the sale of a

Customer Question

I am trying to estimate the tax liability for the sale of a four family house that I sold in May 2016 four $170,000.I purchased the house in 2003 four $100,000. At the time of the purchase the house was situated in a preservation district in Rochester New York and the city had taken legal action against the former owner for the disrepair and deterioration that had taken place over several years. The city required me to obtain a certificate of occupancy before I was able to put new tenants into the house. I expended approximately $25,000 to put a new roof on the house, paint the exterior of the house, and make other repairs.During my ownership I took depreciation by the straight line method for most of the years I derived income from the house.Can you estimate what I would owe for income taxes.I was the sole owner of the property, I am 72 years old, and my only other income is a pension from New York State, and Social Security. These to provide you with approximately $48,000 per year.Thank you.
Submitted: 18 days ago.
Category: Tax
Expert:  Barbara replied 18 days ago.

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

You will pay capital gains on the DIFFERENCE between your adjusted basis and sales price of the house. Based on your information, your adjusted basis is $125,000, but you can also add to that amount closing costs (real estate commissions, etc.) from the purchase and sale. Right now, you will pay capital gains tax on $45,000 ($170,000 - $100,000 - $25,000). Your accumulated depreciation will get SUBTRACTED from your basis.

The following links contain great explanations:

https://ttlc.intuit.com/questions/3328740-rental-property-sold-at-a-loss-do-i-need-to-depreciation-recapture-the-assets-on-sale-of-rental-property-for-loss

https://ttlc.intuit.com/questions/2553574-depreciation-recapture-on-sale-of-rental-property-for-gain

Please let me know if I can assist you further.

Thank you and best regards,

Barb

Expert:  Barbara replied 15 days ago.

Just following up with you to see if you have any other questions. If so, please let me know so I can further assist you.

Best regards,

Barb