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I’m selling a property for 125,000 that I originally

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purchased for 135,000 about nine...
I’m selling a property for 125,000 that I originally purchased for 135,000 about nine years ago almost 10In the interim we put about 45 or $50,000 in work into the building and capital expenses I’m assuming I won’t pay any gains taxes on the property because in actuality were negative on the deal I don’t quite know how to document thatWe have $100,000 loan and that’s the primary mortgage which is on record with the courthouse and we have about $30,000 in other loans which are not on record with the courthouse that are just private business to business loans that we did with other business associates I assume I simply report all of those loans to the title company and they get recorded on the HUD?
Submitted: 8 months ago.Category: Tax
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Answered in 18 minutes by:
11/21/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,677
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi My name's Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, on three continents, since 1986.

...

I'm not sure exactly what your question is. Can you maybe re-state your question?

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Ok, I still don't see you coming back in, so I'll try to answer all the possible questions.

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First, loans are irrelevant to capital gain. Loans are simply how you financed the property (or possibly pulled out additional equity)

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So, although they certainly affect your cash flow, as they have to be repaid from the sale of the collateral securing them, IRS doesn't care how you financed the property. They are interested (better said, the tax code is interested in) what you sell the house for and what you have invested in the house (whether borrowed funds or not).

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Capital gain = Sales price - basis

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ANd basis is your purchase price plus any improvements to the property along the way. So, yes you CERTAINLY have a loss.

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You report this on form 8949 which flows to schedule D.

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But yes, the loans ARE reported on the HUD statement by the closing agent. Typically the closing agent, escrow agent, title company or attorney doing the closing will see the loans and report accordingly.

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Please let me know what questions you have from here

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

One thing I should add ... if you rented the house, the depreciation "allowed or allowable," as IRS says will reduce the basis.

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This is done becasue of the depreciation that was taken, or should have been - it will be recaptured either way, IF after lowering the basis, you end up with a gain.

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Customer reply replied 8 months ago
Right and I will have to leave to my accountant to figure out what our depreciation report he wasMaking, since I don’t really know much about that stuff but I just leave it to him
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 8 months ago

Good. I hope I helped you think it through.

....

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" – That’s the only way I’ll be credited for the work.

...

But again, if you need more on this, please let me know.

Lane

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Tax Professional: Lane, JD, CFP, MBA, CRPS replied 7 months ago

Hi, Lane here. ... I’m just checking back in to see how things are going. ... Did my answer help? … If so, I'd appreciate a positive rating, using the stars on your screen, and then clicking “submit" – That’s the only way I’ll be credited for the work. … But if you need more on this please let me know … Lane

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