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I used 45.000 to buy and rehab a house(put of my savings -

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I used 45.000 to...

I used 45.000 to buy and rehab a house(put of my savings - which I had already paid taxes on) - I sold it for $75,000 at 6% 10 year balloon land contract. Question: I know I have to pay taxes on interest - but my tax preparer is figuring taxes on the principal too - it would seem that I would only pay taxes on ($75,000-45,000= 30,000) the profit over 10 years

Accountant's Assistant: When we are ready I'll take you to the appropriate web page.

I used 45.000 to buy and rehab a house(put of my savings - which I had already paid taxes on) - I sold it for $75,000 at 6% 10 year balloon land contract. Question: I know I have to pay taxes on interest - but my tax preparer is figuring taxes on the principal too - it would seem that I would only pay taxes on ($75,000-45,000= 30,000) the profit over 10 years

Accountant's Assistant: When we are ready I'll take you to the appropriate web page.

Are you there - or should I just withdraw the question

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

The monthly payment includes a small amount of principal plus the interest.

Submitted: 4 months ago.Category: Tax
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Answered in 13 minutes by:
12/23/2017
Tax Professional: Lev, Tax Advisor replied 4 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,719
Experience: Taxes, Immigration, Labor Relations
Verified

Generally - you have a choice - to recognize the gain in the year of sale OR to recognize in following years when you actually will receive the principal.

An installment sale is a sale of property where you'll receive at least one payment after the tax year in which the sale occurs. You're required to report gain on an installment sale under the installment method unless you "elect out" on or before the due date for filing your tax return (including extensions) for the year of the sale.

Under the installment method, you include in income each year only part of the gain you receive, or are considered to have received. You don't include in income the part of the payment that's a return of your basis in the property. Use Form 6252 (PDF), Installment Sale Income, to report an installment sale in the year the sale occurs and for each year you receive an installment payment.

Let me know if you need any help.

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Customer reply replied 4 months ago
thanks - I only had this one question - was it for free (1st time) or do I owe a balance?
other wise - I wish to cancel membership today.
Customer reply replied 4 months ago
no thanks - I do not wish to talk to your expert
Tax Professional: Lev, Tax Advisor replied 4 months ago

Please be aware that experts do not have access to your account.

So I may not know what is your payment plan or payment options.

You may contact customer service directly for all payment questions - and I am sure - all will be addressed in your best interest.

After we finish our conversation - I will forward your request to the customer service.

If you still need any clarification or help with reporting - let me know.

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