Posted by Alex Gurevich, TX on April 12, 1999 at 08:15:37:
Can’t reduce it. I believe if you don’t claim it in the first place, you avoid it. I’m not a CPA, so I’d rather hear from somebody qualified on that.
FIVE more days til freedom . . . - Posted by The Baze
Posted by The Baze on April 10, 1999 at 17:30:59:
Anyway, 2 things worth mentioning. One, got a tenant into that house yesterday. Went smoother than the last house I had. Somewhat better neighborhood plus extra bedroom helps. Got $1500 plus first month’s rent of $632.60. Good cash flow and I’ll make a few bucks on the back end. Wish all my days off could be so productive.
Secondly, man comes into the office today to have his return done (it’s only April 10th, what, did he forget?) He had 8 rental houses for the last 12 - 15 years. He decided last year that he no longer wanted the hassles of owning them, but still liked the cash flow, so he sold them all and financed them himself. Only thing is, he never heard of depreciation recapture. So he’s paying 25% on all that prior depreciation and because of that and his other non real estate related goofs, he’s stuck w/ a tax bill of about $16,000. Ouch! Something to keep in mind when it’s time to sell all those old rentals.
Tom Bazley
Re: FIVE more days til freedom . . . - Posted by Alex Gurevich, TX
Posted by Alex Gurevich, TX on April 12, 1999 at 08:13:14:
>>So he’s paying 25% on all that prior depreciation.
Since he did an installment sale would not that all be spread over years and not due immediately ?
Depreciation Recapture - Posted by Bob-MD
Posted by Bob-MD on April 10, 1999 at 19:01:05:
Tom,
Is there a way to avoid depreciation recapture or reduce it?
Bob
Re: FIVE more days til freedom . . . - Posted by The Baze
Posted by The Baze on April 12, 1999 at 19:24:09:
Alex,
Depreciation recapture is taxed in the year of the sale, whether it’s an installment sale or not. So yes, even though he only took a few thousand down on each house, he has to pay 25% on the recaptured depreciation this year.
Tom Bazley