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re: Can I avoid capital gains on the sale of my rental property?
Posted on 8/4/21 at 9:22 am to jimbeam
Posted on 8/4/21 at 9:22 am to jimbeam
quote:
You’re still on the hook for depreciation recapture correct?
My exchange agent says yes. My neighbor who is the tax partner at a firm says no. I'm still looking into that part.
Either way, the duplex was only $28k when I bought it so the depreciation has been minimal over 8 years.
1
Posted on 8/4/21 at 12:26 pm to Camp Randall
quote:
Duplex to land? I thought there was some like kind rule
The definition of Like Kind is VEERRRRYYYY open.
Posted on 8/4/21 at 12:29 pm to dat yat
quote:
You’re still on the hook for depreciation recapture correct?
quote:
My exchange agent says yes. My neighbor who is the tax partner at a firm says no. I'm still looking into that part.
Here's the deal.
If you swap depreciable property for other depreciable property, you don't have to deal with depreciation recapture.
If you swap depreciable property for non-depreciable property (such as land), then yes, you do need to deal with depreciation recapture.
Posted on 8/4/21 at 8:28 pm to LSUFanHouston
quote:
The definition of Like Kind is VEERRRRYYYY open.
Real estate to real estate is like kind, as long as it is for business or held for investment.
Posted on 8/4/21 at 8:35 pm to LSUFanHouston
quote:
If you swap depreciable property for other depreciable property, you don't have to deal with depreciation recapture.
If you swap depreciable property for non-depreciable property (such as land), then yes, you do need to deal with depreciation recapture.
The tax partner said if the intent was to put a barn or dwelling on the land, that could be avoided. Especially if I leased it out for a season. Its not an issue though, depreciation was 7k over 8 years, capital gain was $120k. Ill just do what the tax guy says at tax time.
Posted on 8/4/21 at 9:12 pm to dat yat
quote:
The tax partner said if the intent was to put a barn or dwelling on the land, that could be avoided.
Intent = inviting the IRS to sniff around
Can you win? Hell yes. Is it a pain and expensive to win? Hell yes.
If you can find land with something on it already, that sure would be easier.
Posted on 8/4/21 at 9:24 pm to LSUFanHouston
I hear you. Neighbor (CPA tax partner) is the type that argues big cases in court; I don't have that kinda scratch. I'll probably bite the bullet on the depreciation recapture and be happy I'm buying a property I like with some tax deferred money.
Posted on 8/6/21 at 1:00 pm to Seaux_cal_tiger
Have you thought about a refi cash-out instead of selling? Take advantage of the low rates and pull out some equity for a down payment
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