Originally Posted by mg1313
Scenario: I purchased my house for $119,000 in June 2010; I received an $8,000 First Time Home Buyer Credit; I moved out in Nov 2011 and then this became a rental property; every year the rental manager has sent me 1099s-Misc. for the rents and expenses that have been deducted as well. In Jan 2013 the renter moved out and I sold this house until May 2013 for $107,000; I was paying both mortgage and rent, and at the time of the sell i had to come up with $15,000 cash to close.
Please list the forms to be used to complete my 2013 Tax Return.
Can the rental sale loss be deductible? Do I pay back the FTHB Credit?
Scenario: I purchased my house for $119,000 in June 2010; I received an $8,000 First Time Home Buyer Credit; I moved out in Nov 2011 and then this became a rental property; every year the rental manager has sent me 1099s-Misc. for the rents and expenses that have been deducted as well.======>>>>>>>>>>>>>> A tenant should issue a 1099 to you if the underlying lease is commercial and is related to the tenant’s business. The appropriate 1099 to provide is a 1099-MISC. The tenant must provide a 1099 if she paid $600 or more in rent
In Jan 2013 the renter moved out and I sold this house until May 2013 for $107,000; I was paying both mortgage and rent, and at the time of the sell i had to come up with $15,000 cash to close.========>>>>>>>>>>>>>>you need to report rental income on sch e of 1040 and deduct rent related expenses you also need to recapture urecapturesd rel estate depre taken in the previous years on the rental home when you sell it; aslongas your tax bracket is 25 % or higher the recap depre ‘d be taxed at 25% however, as you took loses on the sale of the home, you can offset the ordinary income so you do not need to recapture the unrecap depre.
Please list the forms to be used to complete my 2013 Tax Return.============>>>>>>>>>>>> The sale of your ental pty such as a home that is rented for income, is reported on IRS Form 4797; aslongas in 2013, there was any rental activity in the year the property was sold, the rental income and expenses are reported on Sch E. Only include rental income and expenses up until the date of sale on Sch E.you need to enter the sale proceeds on line 1 of Form 4797. The proceeds will be reported to you on form 1099-S. Form 1099-S will be mailed to you by Jan 31 of the year following the sale. You may skip Parts I and II of Form 4797 since they do not apply to the sale of rental real estate.however, as you took losses on the sale of the rental pty, you do not need to fill out part 3.you should fill out part 3 ONLY when you have a gain on sale of the home.Your basis of the pty is the lower of FMV or adj basis when it was converted to rental home.
Can the rental sale loss be deductible? =======>>>>>>>>>>>>>>>>>yes;A loss on the sale of a personal residence is considered a nondeductible personal expense. You can only deduct losses on the sale of property used for business or investment purposes. The only way you can obtain a deduction if you sell your home at a loss is to convert it to a rental property before you sell it. However, your deductible loss will be limited. This is because when you convert property you held for personal use to rental use your tax basis (value for tax purposes) is the lesser of the property’s fair market value, or the property's tax basis as said above. Your tax basis is basically the property's original cost, plus the cost of any improvements you've made (but not repairs), minus any depreciation deductions taken. for example, if you claimed the rental deduction. Fair market value is the price at which the property would change hands between a buyer and a seller, neither under undue pressure to buy or sell, and both having reasonable knowledge of all the relevant facts. Sales of similar property in the area are helpful in figuring out the fair market value of the property. You may also elect to have the property’s value appraised as of the date of its conversion to rental property. Either way, it's very important to have a good estimate of your home's fair market value on the date of the conversion. Because of this rule, if your personal residence has lost value since you bought it, turning it into a rental home won’t allow you to deduct the loss that occurred before the conversion when you eventually sell it. Only the drop in value after the conversion is deductible.
Do I pay back the FTHB Credit?=========>>>>>>>>>>>>> If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at the time the income tax return for the year 2011,the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return on Form 5405