Ready-4-ER-at-14
Full time employment: Posting here.
We recently sold a studio condo when the entire high rise building was acquired by a private group.
It had been rented and depreciated straight line for about 10 years.
The depreciation recaptured was about 35k and the difference between acquisition cost and sale price was also about 35k.
More than six months have occurred and we have paid estimated quarterly taxes for first 3 quarters to take care of this .
The rental was always listed as part of a larger catch all business on our personal schedule c income. We have been doing a SEP (self employed retirement account) from the total larger business income each year and the max (roughly 25%) goes in each December.
I was playing with turbo tax 2017 today and it appears that we can include some of this profit towards the SEP, on the pension contribution line of the schedule C, even though it makes the business show a loss for the year.
The actual sale gets listed on a schedule E as a business gain but doesn't flow directly into the schedule C as profit there. The profit taxed is essentially the capital gain plus the depreciation recapture.
I was wondering if anyone has actually used a rental property sale to fund a SEP like this? I seem to have two logical ideas that conflict.
1. If a business property sold at profit, it seems you could use some of that for funding retirement.
2. If business didn't make a profit, SEP is not allowed.
It had been rented and depreciated straight line for about 10 years.
The depreciation recaptured was about 35k and the difference between acquisition cost and sale price was also about 35k.
More than six months have occurred and we have paid estimated quarterly taxes for first 3 quarters to take care of this .
The rental was always listed as part of a larger catch all business on our personal schedule c income. We have been doing a SEP (self employed retirement account) from the total larger business income each year and the max (roughly 25%) goes in each December.
I was playing with turbo tax 2017 today and it appears that we can include some of this profit towards the SEP, on the pension contribution line of the schedule C, even though it makes the business show a loss for the year.
The actual sale gets listed on a schedule E as a business gain but doesn't flow directly into the schedule C as profit there. The profit taxed is essentially the capital gain plus the depreciation recapture.
I was wondering if anyone has actually used a rental property sale to fund a SEP like this? I seem to have two logical ideas that conflict.
1. If a business property sold at profit, it seems you could use some of that for funding retirement.
2. If business didn't make a profit, SEP is not allowed.