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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2608
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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WE Bought rental property in 1977 as a married couple we

Customer Question

WE Bought rental property in 1977 as a married couple we divorced in 1986 and I bought her out of property for $ 30,000.00 dollars in 1987,can I use this as my cost basis for capitol gains ? I refinanced the existing loan of $30,000.00 for a new loan of $ 60,000.00 to buy her out so IT was just like purchasing it again by myself correct ,also this was not court ordered ,she wanted to sell so she could buy her self a home so I bought it as I wanted to keep for our kids but now I am selling it
JA: The accountant will know how to help. Is there anything else important you think the accountant should know?
Customer: not that I can think of ,feel free to ask questions though
Submitted: 11 months ago.
Category: Finance
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

Your basis will be 1/2 of the original purchase price + 30K. But after depreciating the property for more than 27.5 years your basis had been reduced to 0. You may still have some basis in the improvements you made, that had still being depreciated.

Expert:  emc011075 replied 11 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

If the rental property is a single family house with a parcel of land, some of your basis should have been allocated to the land and no depreciation should have been taken. If that's the case, you still have basis in the land that will be sold with the property. Land is never depreciated.