Tax Calculations
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If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. See Filing an Amended Return, next. If you are not allowed to make the correction on an amended return, you may be able to change your accounting method […]
Written by James Brennan on January 21st, 2007.
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If you qualify to deduct expenses for the business use of your home, you can claim depreciation for the part of your home that is a home office. Generally, the part of your home that is a home office is depreciated over a recovery period of 39 years using the straight line method of depreciation […]
Written by James Brennan on January 21st, 2007.
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Replacements of roof, rain gutters, windows, and furnace on a residential rental property are capital improvements to the structure because they materially add to the value of your property or substantially prolong its life. The items would be in the same class of property as the rental property to which they are attached. Since the […]
Written by James Brennan on January 20th, 2007.
Read more articles on Web Properties and inside1031.com and CardeaCommercial.com and State-Specific 1031 Issues and Tax Calculations and General Tax Q&A and Calc_Q3 and Calc_Q4 and All the Questions You Were Afraid To Ask About 1031s.
If you buy real property, certain fees and other expenses become part of your cost basis in the property.
Real estate taxes. If you pay real estate taxes the seller owed on real property you bought, and the seller did not reimburse you, treat those taxes as part of your basis. You cannot deduct […]
Written by James Brennan on January 20th, 2007.
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Ideally, your Cost Basis. Basis is your investment in property for tax purposes. The difference between the selling price of your assets and your basis determines whether there is a taxable gain or loss on the disposition of your property. You need to determine your basis to figure allowable depreciation deductions as well. Your original […]
Written by James Brennan on January 20th, 2007.
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When reporting the sale of or computing gain or loss on rental property, you are required to make an adjustment to your basis for allowable depreciation regardless of whether the deduction was taken. For more information refer to Publication 544, Sales or Other Dispositions of Assets, and the Form 4797 Instructions, Sales of Business Property.
You […]
Written by James Brennan on January 20th, 2007.
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Under IRC § 1014, upon death all property in the decedent’s estate is entitled to a stepped-up basis for purpose of calculating the heirs’ capital gain upon a subsequent sale. Under this rule, property is valued as of the date of the decedent’s death for purposes of determining its “basis,”without regard to when the property […]
Written by James Brennan on January 20th, 2007.
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Cash or mortgage relief received in an exchange, the result of which is a taxable gain.
Written by James Brennan on January 20th, 2007.
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The taxpayer intending to defer the taxable gain on the exchange of investment property.
Written by James Brennan on January 20th, 2007.
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Let’s say, for example, that a taxpayer disposes of land and building property he has owned for six years with a value of $3 million and an adjusted basis of $1 million. He treated the entire building as section 1250 property for depreciation purposes. He then buys land and a building with a total value […]
Written by James Brennan on January 20th, 2007.
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Generally Not. A QI may not be an agent of the taxpayer. The IRS precludes any person or entity from acting as an intermediary if he or she has performed any non-exchange related business service for the taxpayer within two years from the date of transfer of the relinquished property.
Written by James Brennan on January 20th, 2007.
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Section (g) (4) of the IRS Section 1031 deferred exchange regulations requires a “safe harbor,” such as a Qualified Intermediary (QI), to facilitate the exchange. The QI helps ensure that the taxpayer does not actually or constructively receive the exchange proceeds anytime before receiving the replacement property, as is required for deferred gain treatment.
Written by James Brennan on January 20th, 2007.
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A QI is an independent facilitator unrelated to the exchanger. The QI buys and resells the properties involved in the exchange for a fee. It is strongly advisable that you select a corporation rather than an individual. If an individual intermediary dies or becomes incapacitated, your exchange may not be completed within the time constraints.
Written by James Brennan on January 20th, 2007.
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As an individual, you report the income and deductions for rental properties on page 1 of Form 1040, Schedule E, Supplemental Income and Loss. The total income or loss computed on Schedule E carries to Form 1040.
Report the depreciation of rentals on Form 4562: Depreciation and Amortization.
Written by James Brennan on January 20th, 2007.
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Depreciation is a deduction taken over several years. You generally depreciate the cost of property that has a useful life of more than a year, but gradually wears out, or loses its value due to wear and tear, or wind and rain, when the property is used in business, or to produce income.
Example: Residential Rental with a […]
Written by James Brennan on January 20th, 2007.
Read more articles on Web Properties and inside1031.com and CardeaCommercial.com and Tax Calculations and General Tax Q&A and 1031 Calc FAQs and Calc_Q2.
Great question. Yes there is. Assuming your client is selling an investment property that he or she has held for longer than one year, the client would defer paying capital gains taxes on 15% federal, State Capital Gains (around here between 5-9%) and 25% depreciation recapture tax on all depreciation deductions taken. Thus, this effectively […]
Written by admin on January 19th, 2007.
Read more articles on Web Properties and inside1031.com and CardeaCommercial.com and State-Specific 1031 Issues and Tax Calculations and General Tax Q&A and Calc_Q7 and Calc_Q8 and All the Questions You Were Afraid To Ask About 1031s.