Owner Occupied: Taxes
(by Jeff [Colorado])
February 6, 2001 12:28:46 
RE: Owner Occupied: Taxes
(by Dan A [MA])
February 6, 2001 12:39:49
RE: Owner Occupied: Taxes
(by Deborah [Maine])
February 6, 2001 13:17:56
RE: Owner Occupied: Taxes
(by [])
February 6, 2001 17:23:59
RE: Owner Occupied: Taxes
(by Walt [CA])
February 6, 2001 23:12:01
RE: Owner Occupied: Taxes
(by Kris [(IN)])
February 7, 2001 08:48:12
RE: Owner Occupied: Taxes
(by JOE [TN])
February 7, 2001 15:59:45 |
I lived in an owner occupied duplex with my ex-girlfriend. We are in process of splitting up the properties and seperating finacially. The duplex was completely in her name and we are looking to legally split it and sell each unit seperately. We can sell the owner occupied side for enough money to pay off the whole mortgage. I then want her to sell me the side that was rented at one half the original sales price so that I can live in it. My question is this. Will she be taxed on the profits on the sale of the whole duplex, or only on the profits on the rental side (which in effect there will be no profits)? She has lived in the one side for over 2 years so I am hoping that this side can be sold at any price tax free. While the other side will be sold to me at the one half the origianal sales price. I know many will say ask your accountant, and we have been trying but with the busy tax season upon us we can't get an answer out of her. Time for a new accountant I think. 24.4.255.160 |
|
Are you allowed to sell each side separately. Here in Mass, you would essentially be turning each unit into a condo and you would need the appropriate permission from the local city in order to do that (I believe it may be a zoning issue). I have no idea how the taxes go, but your logic seems a little flawed. If she sells the owner occupied side and uses her personal exemption then there may be no tax. However, when she sells the rental side (even at half the original purchase price of the duplex) she has to at least recapture depreciation and that makes it more likely that you may being paying capital gains on that portion of the sale. As you said up front, this is a good question for a CPA. 207.138.153.34 |
| second of all.if you don't own this property?????????????? 207.5.236.236 |
|
Dan to clarify: We are legally splitting the duplex. Here in Colorado you just need to write up a partywall agreement, and it is a very common practice in the city. As far as depreciation, if that is all we had to pay that would be fine. Being that it would be pennies compared to the capitol gains. We originally bought the duplex for $180 thousand. We plan on selling the owner occupied side for $185 thousand and she would sell the rental side to me for $90 thousand if we could avoid the capitol gain taxes. As far as ownership, my name is not on the deed or the mortgage but we both agree that 1/2 of the interest in the building is mine. We bought several rental properties together but only put one name on the mortgages in order to extend our credit. We are splitting up on good terms and neither party is trying to cheat the other. Any info someone could give me would be greatly appreciated. We have thus far been unable to get help from our CPA. 38.194.59.36 |
|
Since you are buying a former rental that is equivalent to the basis of the property, she would not pay any tax since she has no gain...except she has taken depreciation which would lower her basis. possibly she added improvements which would raise the basis, doubtful one would offset the other but who knows. What she should do is to exchange the rental side for another rental property. That way she would defer any capitAl gains; if done correctly. 24.4.255.193 |
| Okay... just wondering if you own several properties together why don't you just "buy" the entire duplex from her at the cost she bought it for minus depreciation and have her "buy" an equivilant one of yours for the same deal? No splitting required and less weird tax stuff to hammer out. Renting out the other side would then be no problem for you since you already have landlording experience. 208.16.228.52 |
| Just but it from her. 209.214.114.64 |