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I need further clarification regarding...
I need further clarification regarding your answer to my original question. Are you saying that if we quit claim the investment property even if the property is not for sale--kind of a "buy out" of 1 owner of the the other 2 owners (w/c is us)---we will be subject to capital gain tax & depreciation re-capture? All three of us bought this condo in Alameda (CA) for $160,000 35 yrs ago & rented it. Now it is worth at least $350,000.
Submitted: 2 years ago.Category: Tax
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Answered in 3 minutes by:
1/29/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,360
Experience: Taxes, Immigration, Labor Relations
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If there are several co-owners - we will need to examine transactions SEPARATELY for each owner.

When ONE owner sells his/her share - THAT transaction is reported on his tax return.
Correspondingly - THAT seller will realize capital gain.
Other owners would NOT be affected.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

So far - for the "buy out" agreement - we need to know the price paid to the departured co-owner - and THAT person will report on form 8949 the disposition of the property as (selling price) MINUS (adjusted basis)

Let me know that selling price - and I will help to estimate expected tax liability.

Correspondingly for other owners - the price they pay for the "buy out" agreement will be their basis in purchased part of the property - that basis will be used when they eventually will sell the property.

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