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Tax implications of rental property
Posted on 4/6/10 at 9:42 am
Posted on 4/6/10 at 9:42 am
Ok, girlfriend and I are probably going to get married next year, and we are trying to decide if we should keep her condo and rent it out. It is in a very desirable location in Houston. Would it be worth it? What type of tax implications would we have with this. I'm going to sell my house and we'll get another one.
2
Posted on 4/6/10 at 10:02 am to Kingwood Tiger
just need to fill out a sch E
and that will go on line 17 of 1040 and be included in taxable income...it shouldn't be hard to show a loss
and that will go on line 17 of 1040 and be included in taxable income...it shouldn't be hard to show a loss
Posted on 4/6/10 at 2:36 pm to Kingwood Tiger
Before you consider the tax implications of keeping the condominium as an investment what are the economic implications? Is it a good investment compared to the alternatives available to you?
Posted on 4/6/10 at 4:24 pm to Poodlebrain
Only keep the condo if you can put 20% down on whatever house you plan on moving into. If you don't have the 20% sell the condo. Expecially if you are not planning on buying a bunch more
Posted on 4/6/10 at 4:37 pm to Poodlebrain
Poodlebrain
Do I have to “recharacterize” the value of a condo I convert from a residence to a rental? For example: bought condo 5 years ago for $ 200,000 and lived in it for entire time period. Now worth $100,000 and I move out and start renting it. 5 years from now I sell it for $150,000. Do I have to show a gain of $50,000 because that was the value when I converted to a rental?
Thanks in advance.
Do I have to “recharacterize” the value of a condo I convert from a residence to a rental? For example: bought condo 5 years ago for $ 200,000 and lived in it for entire time period. Now worth $100,000 and I move out and start renting it. 5 years from now I sell it for $150,000. Do I have to show a gain of $50,000 because that was the value when I converted to a rental?
Thanks in advance.
Posted on 4/6/10 at 5:31 pm to PlanoPrivateer
No, your cost basis in the condo is your purchase price plus any improvements you have made. Upon placing the condo in service as a rental you can claim depreciation expense on the building and its components as allowed by tax laws. Using your example, you would claim depreciation of approx. $7,272 per year. The depreciation expense being a deduction against your ordinary income each year. After 5 years your adjusted basis would be $163,640. So you would be able to report a section 1231 loss of $13,640 on the sale of an investment property.
Posted on 4/7/10 at 3:56 pm to Poodlebrain
Thanks for some good news about a bad situation.
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