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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4676
Experience:  35 years tax experience, including four years at a Big 4 firm.
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My question refers to the tax liability on the sale of a

Customer Question

My question refers to the tax liability on the sale of a property I had a 2nd TD on, subsequently foreclosed, reinstated the prior owner's loan, making the prior owners mortgage payments and am now considering selling the property. My question concerns what part of the eventual selling price is taxable? I also have $275,000 in capital losses on other properties that were foreclosed under me by the 1st TD holders.
Submitted: 2 years ago.
Category: Tax
Customer: replied 2 years ago.
In 2009 I executed a 2nd Trust Deed for $60,000 on a property in Winnetka CA. Borrower never paid. I foreclosed in 2013. TDUS has me as holder of title. I reinstated the borrower's loan for $35,000 and have been making regular payments on the original 1st TD ever since. Loan payoff is 380,000. Target sale price 600,000. With fees, etc. say profit of 200,000 as example. What would my tax liability be on a 200,000 profit? Can I deduct the costs of foreclosure, 5 years of legal fees, loan reinstatement, repair of property? Capital gain? I also have a total of 275,000 in Capital losses from other failed 2nd TDs incurred during the late recession. Can these capital losses be credited against any capital gains on the sale of this property, or a capital gain on any other real estate property I sell?
Customer: replied 2 years ago.
Also can my loss of the original $60,000 loan principal be considered against a tax liability?
Expert:  PDtax replied 2 years ago.

Hi from just answer. I'm PDtax. The calculations you need are involved, but I can assist.

The project will take some time and more information to resolve. I will post an offer to assist. Accept, and we can work on this tomorrow morning.