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04-11-2013, 02:54 AM
 Junior Member Join Date: Apr 2013 Posts: 2
Capital Gains/Loss on converted property

How would I calculate my gains/loss:
* Bought home in 1989 = \$120,000 added \$30,000 improvements
* Convert to rental in 2002 = \$235,000 appraisal value
Depreciation taken \$35,000
* Rental property from 2002 to 3/2012, vacant after that
* Foreclosure not finalized, estimate Loan Balance \$220K; FMV \$150K

Do I need two separate calculations for gain/loss: Prim Hm vs Rental Hm?

1 Prim Hm: \$150K(\$120K + \$30K) less \$150 FMV = \$0
2 Rntl Hm: \$200K(\$235K - \$35K) less \$150 FMV = (\$50K) loss

Will I still have to pay taxes on \$35K depreciation? or can I use the Rental Home loss of (\$50K) to eliminate the taxable depreciation?

04-12-2013, 04:29 AM
 Moderator Join Date: Oct 2010 Posts: 5,241
“How would I calculate my gains/loss:
* Bought home in 1989 = \$120,000 added \$30,000 improvements”=======>Adj basis of the home is \$150K;\$120K+\$30K
* Convert to rental in 2002 = \$235,000 appraisal value========>When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion.then your basis for rental use is \$150K, NOT \$235K.
* Rental property from 2002 to 3/2012, vacant after that
* Foreclosure not finalized, estimate Loan Balance \$220K; FMV \$150K”=======>Your gain is \$35K;\$150K-\$115K

Do I need two separate calculations for gain/loss: Prim Hm vs Rental Hm?=======>As long as the home was foreclosed as rental home, so you need calculation for gain/loss only for rental Hm,

“1 Prim Hm: \$150K(\$120K + \$30K) less \$150 FMV = \$0”====>It is sec 1231 pty ; aasit is rental pty NOT PH.So its gain is LTCG.
“2 Rntl Hm: \$200K(\$235K - \$35K) less \$150 FMV = (\$50K) loss”======> \$35K;\$150K-\$115K

“Will I still have to pay taxes on \$35K depreciation?”==========>Even if you were in bankruptcy or were insolvent, your gain of \$35K, so you need to recapture the unrecap depre of \$35K.
“ or can I use the Rental Home loss of (\$50K) to eliminate the taxable depreciation?”=======>As said above.

04-12-2013, 04:49 AM
 Junior Member Join Date: Apr 2013 Posts: 2
Thank you for your detailed response!

Ok, thank you very much for your detailed response!
Quote:
 Originally Posted by Avert How would I calculate my gains/loss: * Bought home in 1989 = \$120,000 added \$30,000 improvements * Convert to rental in 2002 = \$235,000 appraisal value Depreciation taken \$35,000 * Rental property from 2002 to 3/2012, vacant after that * Foreclosure not finalized, estimate Loan Balance \$220K; FMV \$150K Do I need two separate calculations for gain/loss: Prim Hm vs Rental Hm? 1 Prim Hm: \$150K(\$120K + \$30K) less \$150 FMV = \$0 2 Rntl Hm: \$200K(\$235K - \$35K) less \$150 FMV = (\$50K) loss Will I still have to pay taxes on \$35K depreciation? or can I use the Rental Home loss of (\$50K) to eliminate the taxable depreciation?

09-25-2013, 05:17 AM
 Junior Member Join Date: Sep 2013 Posts: 2
This post help me out in deciding the required capital for my newly business.
I just need to keep it in my note book and apply at many tricks.

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