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Lane: I just closed on the sale of a property. The closer…

Lane: I just closed on...
Lane: I just closed on the sale of a property. The closer asked me several times if it was my primary residence, in regard to the 1099 report. I am retired and didn't spend lots of time there (I have another home) but I have made the payments and paid the taxes. I did not collect any rents or report the property as a rental. I told her no, it was not my primary residence and that is what she put down on the form. Did I make a mistake? I think I could possibly change it. Also, if the sale proceeds are reported on 1099, could I deduct attorney fees I spent attempting to defend my investment? Another person was on title with me and challenged her share vs mine. Thanks.
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Answered in 4 hours by:
12/28/2017
Barbara
Barbara, Enrolled Agent
Category: Tax
Satisfied Customers: 6,686
Experience: 20+ years of experience in tax preparation; 30+ years of experience as a real estate/corporate paralegal.
Verified

Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

No. You did not make a mistake by telling the closer that the property was not your primary residence. You reported it correctly.

As to the attorney's fees, they are not deductible, BUT you would add those fees to your basis when figuring the capital gain on the sale.

For example, if you purchased the property for $100,000 and had $5,000 in attorney's fees, your basis becomes $105,000. In your case, because there was another owner, your basis would be $50,000 PLUS the $5,000 in attorney's fees you paid or $55,000.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,899
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. Thanks for waiting on me.

...

Yes, if the attorney's relate to the proceedings we've been discussing, yes, the attorneys fees are certainly deductible, as you were in deed, protecting your investment.

...

In terms of what you told the closing agent, the fact that you reported accurately as you did, reinforces that this was not personal use property, making the attorneys fees for the protection of your investment, as relates to the previous filing, deductible.

...

Let me know if you have questions.

...

Lane

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Customer reply replied 7 months ago
Thank you Lane! I paid the full payment all of this year after the Plaintiff moved and paid nothing. Then would I deduct the interest, insurance and taxes I've paid for the last year as a rental (I don't plan to depreciate) and then use the attorney fees as an increase to my basis for capital gains on the sale? I may need some help with taxes regarding this soon. Are you in Colorado? Are you available outside of JustAnswer?

The answer is yes, again, given the context here.

...

I'm sorry but I'm not taking new clients at the moment. I'm completely swamped this year.

...

Given the complicated nature of your situation, I'd recommend that you seek out a tax attorney licensed in your state to help you with this year's return.

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(would appreciate a positive rating, so they'll compensate me).

...

Thanks

...

(Sounds like you're finally going to be able to move on, after what she put you through. I'm happy for you)

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Customer reply replied 7 months ago
I'm disappointed that you're not available, but I'm not surprised, given your obvious expertise. I'll seek out someone. Yes, it has been a long year. In the end, the order said briefly: "Plaintiff did not prove her contributions, so I can't give her credit for them. She made only 2 payments. Defendant made the down payment and $40,000 of payments. Plaintiff believes that she deserves 50%, so I'm awarding it to her." I got the return of my initial down payment and 50% split in the equity. So I am appealing. My appeal attorney called it lousy judicial thinking, a real headscratcher, and a windfall for her. But I'm happy the worst is over and ready to move on. I appreciate your advice. It's kept me going through some tough times. Thanks!
I'll give you a great review, as usual.

You're very welcome ... You've certainly erred on the side of taking the high road.

...

I'm sure your choices will come back " around," to reward.

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,899
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 7 months ago
I believe in Karma. Best wishes for you in the New Year!

Almost used the word, but you never know what might offend. Yes, CERTAINLY good Karma.

...

Thank you for the rating. Have a great year!

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