Posted on: 19th Apr, 2011 06:23 am
We owner financed the sale of our property in the summer of 2008 for $450K. We were given $150K downpayment -- which we paid taxes on. The buyer defaulted on his first payment a year later, and so we foreclosed with him still owing us $300K plus legal fees. The market has since dropped severely and we are now forced to resell the property for $260K. How do we figure capital gains tax on the final sale of the property? We're hoping there will be no gains, since -- in the end -- it was a loss of over $40K.
Thanks!
Suzanne L.
Thanks!
Suzanne L.
Hi SLeonhard,
Welcome to Mortgage fit,
In first instance you have not completed the deal,just the down-payment that also went to tax payments (although not in full) so in this whole deal you haven't gained any profit so there is no question of paying taxes for it.
Rather you can avail tax benefit for the losses in the real estate deal.
Apart from this I will suggest you to take a third opinion from a CPA and then you should go ahead.
Feel free to ask any further query if you have.........
DIPA
Welcome to Mortgage fit,
In first instance you have not completed the deal,just the down-payment that also went to tax payments (although not in full) so in this whole deal you haven't gained any profit so there is no question of paying taxes for it.
Rather you can avail tax benefit for the losses in the real estate deal.
Apart from this I will suggest you to take a third opinion from a CPA and then you should go ahead.
Feel free to ask any further query if you have.........
DIPA
I'm in agreement with Dipa as far as your needing to get advice from a tax professional.
