Posted by Eric in FL on August 31, 2009 at 21:42:42:
Absolutely, but isn’t it fantastic to realize a gain like this on January 1 and have 364 days to address it!! And, utilize that money to purchase other income driving assets that also can take advantage of accelerated depreciation schedules. Life is good.
Best Regards,
Eric
CAPITAL GAINS TAX - Posted by kertis
Posted by kertis on August 28, 2009 at 08:53:42:
I bought a property for 50,000 few years back…it was destroyed about a year ago in a fire… Insurance paid off the mortgage leaving it free and clear…I sold it for 30,000 and walked away with 25500…
Is this considered a profit even though it was purchased for 50000?
if yes, How would I calculate capital gains tax on my profit?
should I buy another property to avoid having to pay alot of gains tax?
if I use the majority of the 25500 to buy equipment for a business I own, will that be enough to not worry about capital gains tax?
Re: CAPITAL GAINS TAX - Posted by Dave T
Posted by Dave T on August 31, 2009 at 05:21:08:
You need to get the IRS Pub on Casualty and Theft Losses and complete the worksheets to figure out your new cost basis.
If you have a capital gain, it will be the difference between your new cost basis and $25500.
Re: CAPITAL GAINS TAX - Posted by Dave T
Posted by Dave T on August 28, 2009 at 22:27:22:
Since you have already sold the property, the sale is a taxable event. There are no tax deferral strategies available to you after the sale.
Re: CAPITAL GAINS TAX - Posted by Len
Posted by Len on August 28, 2009 at 18:52:17:
As is suggested, I would consult with a tax professional, because there are too many facts missing to give an answer.
For one, was this a personal residence or a rental property?
Were any improvements made to the property during the time that you owned it?
Was there any kind of depreciation taken on the property?
Etc., etc., etc.
The point is that without more discussion about what went on in the past with the property, there is no honest way to give you a definite answer.
To help you out somewhat, Google “Publication 547” (keywords), which is the IRS publication for Casualty and Theft Losses. Refer to it for a good discussion about what your possible options are in this situation relative to the casualty.
Good luck!
Re: CAPITAL GAINS TAX - Posted by akumpis
Posted by akumpis on August 28, 2009 at 10:18:36:
I would recommend you talk with a local CPA that knows real estate taxes.
Re: CAPITAL GAINS TAX - Posted by Eric in Fl
Posted by Eric in Fl on August 30, 2009 at 08:13:03:
He could decide to take real estate courses, depreciate other properties at a more rapid rate (compartmentalize), or purchase a new gas guzzling truck that weighs over 7,000 pounds. All of these will lower his exposure and gain.
Best Regards,
Eric
Re: CAPITAL GAINS TAX - Posted by Dave T
Posted by Dave T on August 31, 2009 at 05:04:16:
Since the gain is already realized, it will have to be recognized on his tax return and taxed accordingly. The other things you mention might lower the total tax liability but won’t affect the taxable gain itself