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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29571
Experience:  Taxes, Immigration, Labor Relations
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I have sold my rental property and it never made a profit. I

Customer Question

I have sold my rental property and it never made a profit. I had to pay part of the mortgage payment out of my own pocket to keep up. My question is there an exclusion if I never made a profit. It became a rental in January of 2010 and my sale date is 12/4/15 (today). Will I be required to pay 15% on the $49,400 that I made on the sale. What form will I be using in order to report this on my tax return. In 2010 I did have to move in order to get a job. I worked for my Mom for 2 years then took over the business in January 2012.
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

We need to be clear if you realized a gain on that sale.

If you do realize a gain - that gain will be taxable.
However - we need to verify if you correctly calculated the gain

That is (selling price) MINUS (adjusted basis)
The basis is your original purchase price and it is adjusted mainly by improvement expenses and by depreciation for the time the property was rented.

The mortgage amount you paid out of proceeds is not relevant.

To report the sale transaction - use form 4797 - report as separate items - the land and the building.

Any questions?

Expert:  Lev replied 1 year ago.

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