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Old 11-21-2016, 03:49 PM
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Capital Gains on selling out of REIT

I put money into a new low income apartment building about 15 years ago. In 2010 we sold the apartment building to a REIT and the money was transferred as a 1031 exchange. At that point I withdrew half of the value. The value that went into the REIT was roughly $14,000 and is currently $16,000 but I will lose $1000 in fees.

Does the capital gains calculation go back to the original amount or just the change in value while part of the REIT?

Will the tax forms I receive include everything I need to calculate the capital gains or do I need to go back to all the paperwork to see my initial investment?

Mark



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Old 11-22-2016, 02:09 AM
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Originally Posted by bbcandyman View Post

#1;Does the capital gains calculation go back to the original amount or just the change in value while part of the REIT?





#2;Will the tax forms I receive include everything I need to calculate the capital gains or do I need to go back to all the paperwork to see my initial investment?

Mark
#1;you need to go back to the original amt to calculate your taxable LTCG; for example, say, the low income rental property has a selling price of $500K and it is estimated the total selling costs will be $40K. The property cost $150K when purchased 10 years ago. No depreciable improvements have been made. The estimated depreciation taken is $45K.your total taxable gain is $355K;$500K-$40K-$105K($150K-$45K); then you must pay sec 1250 recapture tax at ordinary tax rate if 25% on the depreciation taken previously; so $45K*25%=$11.250K plus LTCG of $46.5K($355K-$45K=$310K), total fed tax liabilities' be $57.750K as your tax bracket is higher than 15%; aslongas your marginal tax rate is 15% or lower then no LTCG t ax.
Since you, an exchanger, want to take money out of the exchange to pay a Non Exchange Expense, you must do so at closing and taxes will be owed on the amount that you received. Taking money out for a Non Exchange Expense while the money is sitting with the Exchange Facilitator may jeopardize the exchange. An exchange is not an ?all or nothing? proposition. You may proceed forward with an exchange even if you take some money out to use any way you like. You will, however, be liable for paying the capital gains tax on the difference called boots





#2;yes as mentioned above; you must calculate your taxable LTCG so yo need to go back to find your initial investment purchase cost.



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Old 11-22-2016, 10:28 AM
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Thanks for the reply. In an exchange does the REIT then keep track of the original investment, depreciation, etc. from the apartment building? Obviously I can find my paperwork on the original investment but how else do I know the depreciation?



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Old 11-22-2016, 03:09 PM
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Originally Posted by bbcandyman View Post
Thanks for the reply.




#1 In an exchange does the REIT then keep track of the original investment, depreciation, etc. from the apartment building?



#2Obviously I can find my paperwork on the original investment but how else do I know the depreciation?
#1; not REIT you need to keep track of the original investment, depreciation, etc. from the apartment building



#2; On SCh E of 1040 depreciation schedule;you may contact your tax preparer for depreciation reports



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Old 11-22-2016, 03:11 PM
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Thanks for your assistance. Have a great Thanksgiving.



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