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I have a property that I purchased in 1978 in New Jersey.

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I have a property...

I have a property that I purchased in 1978 in New Jersey. The property includes my large 2000 Sq. Ft. Home and a Commerical Unit of 1,400 Sq. Ft. I still live in the Residential home part of the property. The Commercial portion of the property was for 12 year my business (Bakery) After those years in business I had rental the space for most of those years and it remained a home town Bakery and Deli. During all of those years when filing Taxes I have depreciated the Commercial side of the property. both when I operated the business and when renting. I also always claimed any expenses related to the part of the property against the any income received. Over the past 2 years that property has not been rented due to slower business climate. I have recently been told by my new accountant I have been using for 2 years at tax time that IF I were to discontinue any further depreciation and claiming any lost due to non-rental for at least 2 years I will not have to pay back any benefit I obtained from do so all of the years prior to these two years. I cannot seem to find any verification of that information anywhere as of yet and when calling the IRS Directly I am told that Tax Experts (Lawyer or Accountants) are only available for such question during tax season.

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

New Jersey

Accountant's Assistant: Has any paperwork been filed?

?

Accountant's Assistant: What confuses you?

The detail of what my question was above covers everything

Accountant's Assistant: Anything else you want the lawyer to know before I connect you?

No, my name is John

Submitted: 9 months ago.Category: Tax
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Answered in 28 minutes by:
9/18/2017
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 9 months ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2,408
Experience: Certified Public Accountant
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Hi, my name is Mark. I will be happy to help you with your questions.

If you would sell the property (both units), you would be able to exclude a gain of up to $250,000 ($500,000 is married filing jointly) for the amount of sale allocated to your residence. The sale of the business portion / rental would be considered sale of business property. This would be reported on form 4797. Your gain would be determined by your adjusted basis in the property. The adjusted basis would be the original purchase price, plus improvements, less depreciation claimed. If the gain exceeds the amount of accumulated depreciation then the excess would be treated as a long-term capital gain. The amount of gain, up to the amount of accumulated depreciation would be taxed at ordinary rates as a result of depreciation recapture. So I disagree with what your accountant is telling you.

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