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Myself and a co-owner of a house and 2 acres of property in

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West Virginia are preparing to...
Myself and a co-owner of a house and 2 acres of property in West Virginia are preparing to sell the property the first part of next year (2011). The property was purchased in June 2007 for $65,000. A $40,000 mortgage remains. We expect to sell the property for $75,000. After paying the realtor we expect to receive $70,000 minus the mortgage, netting around $30,000 which we will split. The question concerns capital gains. Are the capital gains paid on the $30,000 or on the $10,000 profit. In my present situation, my current income is $985 per month on a 70% VA disability pension which is non-taxable. Any money extra that I would earn is deducted from the VA payment. I am on the deed, but not on the loan. Do you think that it would be better to switch over and collect social security (65 yrs. old) at about $865 per month and drop the VA pension. It seems to me that my only tax liability initally would only be what ever amout that I make on the house.
Submitted: 7 years ago.Category: Tax
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Answered in 23 minutes by:
12/3/2010
Tax Professional: MequonCPA, Certified Public Accountant (CPA) replied 7 years ago
MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,342
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Was this a rental property? If so, how much depreciation was taken.
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Customer reply replied 7 years ago
This was a permanant residence for me and a secondary residence for my buddy.
Tax Professional: MequonCPA, Certified Public Accountant (CPA) replied 7 years ago
Hi -

The capital gains in this scenario will be approximately $5,000 (sales price $75k less selling costs $5K less basis $65K) which will be split 50/50 so each of you will report $2,500 in long term capital gain.
MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.

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