Amethyst
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Dec 21, 2008
- Messages
- 12,686
**All numbers are fictional**
Let's say we sell for $200K a property that we bought for $150K and have rented out for many years. During those years we took a total of $75K depreciation, along with $60K in "real"(as in actual business expenses) passive, unallowed losses.
The broker fee is $12K, closing costs (paid by us) are 5K.
Simple arithmetic to determine capital gain for tax purposes:
Orig cost $150K minus $75K depreciation = Cost basis of $75K
$200K - $75K = "Gain" of $125K
Subtract passive unallowed loss $60K and selling costs $17K = "Gain" of $48K. This is the amount on which we would owe tax.
Did I do the math correctly? Or is the depreciation part treated in a special way?
(Note: I did try to parse the relevant IRS pubs. My head still hurts).
Thank you,
Amethyst
Let's say we sell for $200K a property that we bought for $150K and have rented out for many years. During those years we took a total of $75K depreciation, along with $60K in "real"(as in actual business expenses) passive, unallowed losses.
The broker fee is $12K, closing costs (paid by us) are 5K.
Simple arithmetic to determine capital gain for tax purposes:
Orig cost $150K minus $75K depreciation = Cost basis of $75K
$200K - $75K = "Gain" of $125K
Subtract passive unallowed loss $60K and selling costs $17K = "Gain" of $48K. This is the amount on which we would owe tax.
Did I do the math correctly? Or is the depreciation part treated in a special way?
(Note: I did try to parse the relevant IRS pubs. My head still hurts).
Thank you,
Amethyst