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Sat May 16, 2020, 12:22 PM

I have a question on Real Estate sales and tax implications.

I own a family property with my siblings that we want to sell. Assuming the sale happens, what is the tax implication to me? I am 67 and am interested in what I can expect for federal tax liability.

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Reply I have a question on Real Estate sales and tax implications. (Original post)
OAITW r.2.0 May 2020 OP
Cary May 2020 #1
OAITW r.2.0 May 2020 #2
Cary May 2020 #3
OAITW r.2.0 May 2020 #4
3Hotdogs May 2020 #5
PoindexterOglethorpe May 2020 #6
OAITW r.2.0 May 2020 #7
progree May 2020 #8
Cary May 2020 #9

Response to OAITW r.2.0 (Original post)

Sat May 16, 2020, 12:25 PM

1. Capital gain tax and ordinary income tax on any recaptured depreciation

Your tax cost basis will be purchase price, or stepped up market value on inheritance, plus any improvements minus depreciation.

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Response to Cary (Reply #1)

Sat May 16, 2020, 12:33 PM

2. Thanks! I was hoping that my age would give me some kind of taxbreak....

my savings is pretty meager and I have little in the way of pension income. Still working, though. But who knows how long I can count on that...

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Response to OAITW r.2.0 (Reply #2)

Sat May 16, 2020, 12:39 PM

3. Your lower income may give you lower rates

You should calculate the various scenarios.

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Response to Cary (Reply #3)

Sat May 16, 2020, 12:42 PM

4. Good info, thanks!

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Response to OAITW r.2.0 (Original post)

Sat May 16, 2020, 01:24 PM

5. Ideally, you had the property appraised when you inherited it.

If not, a real estate appraiser or agent can reconstruct an approximation of its value at time of inheritance. Appraiser would likely be able to do a better job on this.

Sooo. When it is sold, subtract the sale price from the appraisal at inheritance value. Divide that by the number of sibs you are sharing the proceeds.

Take that number and multiply it by 18. That is probably your tax liability.

What do you think it is worth, now? How long have you owned it?

There are other considerations, including your annual income.

You are best advised to consult an accountant before the sale. Have such accountant prepare your taxes on the year of the sale.

I believe you will be better served, paying an established accountant in your community as opposed to a national chain or internet based preparation.

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Response to OAITW r.2.0 (Original post)

Sat May 16, 2020, 01:24 PM

6. Keep in mind that whatever money you realize,

it's all pure profit to you. Money you otherwise would not have gotten. Don't fret about having to pay whatever taxes are due. Just appreciate your good fortune.

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Response to PoindexterOglethorpe (Reply #6)

Sat May 16, 2020, 01:37 PM

7. We know that...

one of the reasons we are selling is the problem of passing it to the next generation in the 4 families. Together we have 10 kids. Splitting time available to use vs. paying property taxes is a big issue as well.

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Response to OAITW r.2.0 (Original post)

Sat May 16, 2020, 02:58 PM

8. One can exclude $250,000 (single) or $500,000 (MFJ)

When you sell your home, the capital gains on the sale are exempt from capital gains tax. Based on the Taxpayer Relief Act of 1997,1 if you are single, you will pay no capital gains tax on the first $250,000 you make when you sell your home. Married couples enjoy a $500,000 exemption. There are, however, some restrictions on this exemption.2


etc. etc. https://www.investopedia.com/ask/answers/06/capitalgainhomesale.asp

I don't know how that works if 4 of you own it ...

Separately, the state or county might impose a 1% or 2% sales tax.

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Response to progree (Reply #8)

Sat May 16, 2020, 03:38 PM

9. Not unless it is a primary residence

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