Discussion:Please put me out of my foreclosure misery
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Discussion Forum Index --> Advanced Tax Questions --> Please put me out of my foreclosure misery
Discussion Forum Index --> Tax Questions --> Please put me out of my foreclosure misery
| 17 February 2008 | |
| The facts:
-Taxpayer purchases 6 unit rental property in 2005, seller-financed, interest only loan. -TP puts $50,000 down, mortgages with seller $530,000 -TP puts $31,000 improvements into property in 2007 and converts property to condos -TP sells one condo for $145,000 and gives the money directly to pay down his "mortgage" -TP realizes he is losing money rapidly, and relinquishes ownership (via quit claim) to the original seller on 12/31/07 Meanwhile... -TP has had suspended rental losses because his income exceeds $150k (he is not RE Pro) -Total unallowed prior year passive losses total $46,253 My question (I am using Proseries)... I have to report the sale of the property, so if I report only the $145,000, it shows much bigger losses than he is allowed. My thought is that he has been forgiven of the amount which has been the basis for depreciation ($522,000 - I don't know why this number isn't $580,000, but the previous accountant started this), and then I need to increase that by the sale of the condo ($145k). Thus, the sale price I show for Proseries is $667k. Am I thinking of this the right way? Thanks for your input! | |
| 17 February 2008 | |
| Think Basis - forget mortgages - TP paid 580K for rental units + 31K in improvements
You need to compute the basis for the rental he sold - he will have profit or loss on that sale. Next the remainder was "sold" back to the original owner - Sale should be even with basis TP is allowed all passive losses carried forward in year of sale. Hope this helps - Just remember you have 2 sales. | |
| 21 February 2008 | |
| Thanks Joe! That's what I figured after I thought about it a little more. | |
