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Sale of Former Residence Converted To Rental

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    Sale of Former Residence Converted To Rental

    Hypothetical situation that is mirroring a real-life client situation:

    Purchase residence for $250k in 2006
    Convert it to rental in 2009 when FMV is $150k
    $20k of accumulated depreciation taken during the rental period from mid 2009 to mid 2015.
    Property sold in 2015 for $200k after expenses.

    Is there Unrecaptured 1250 Gain? I think not because there is no overall gain (basis for gain is $230k, basis for loss is $130k), but doesn't that mean the taxpayer is getting to deduct $20k of depreciation while the asset appreciated? Isn't the whole point of Unrecaptured 1250 Gain to even out depreciation taken with how much the value of the property has actually depreciated once that is revealed due to a sale? Does the IRS basically cut the taxpayer a break here and ignore the depreciation because he has an overall (albeit personal) loss?

    #2
    Originally posted by TomJ View Post
    Is there Unrecaptured 1250 Gain?
    No taxable gain or recapture.

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      #3
      Depreciation Recapture

      What about depreciation recapture?

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        #4
        Originally posted by Snaggletooth View Post
        What about depreciation recapture?

        It's actually called "Unrecaptured Section 1250 GAIN". If there isn't a gain, that doesn't come into play.

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