Blog Archives

Excess Depreciation Claimed – Now What?

Justin Fundalinski of Jim Saulnier & Associates, who I met while volunteering time for the betterment of the Financial Planning Association, asked me a procedural question about a fascinating situation he encountered regarding depreciation and disposition of residential rental real estate,

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Posted in Depreciation, Rental Real Estate

How to Calculate Basis of a Primary Residence Converted to Rental Property [Reg. §1.168(i)-4(b)] [Reg. §1.165-9(b)(2)]

Many people have built impressive residential real estate portfolios one property at a time, living in the property while fixing it up thus declaring it their primary residence for income tax purposes and then moving onto a new house to

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Posted in 1031 Exchange, Basis, Capital Gain, Capital Loss, Depreciation, Passive Activity, Rental Real Estate, Tax Guidance & Preparation

Gift Tax on Transferred Real Estate

The person or entity transferring a property has a capital gain to the extent that the amount realized exceeds the adjusted basis of the property. However according to Reg § 1.1001-1(e) no loss is allowed on a transfer that is part

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Posted in Estate Tax, Family, Gift Tax, Rental Real Estate

Co-ownership of Rental Real Estate Does Not Require Partnership Formation

Generally co-ownership in rental property does not require the formation of a partnership when the following conditions are met. 1. Each co-owner must hold title to the property as a tenant in common (TIC) under local law. This usually doesn't apply

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Posted in Husband/Wife, Partnership, Rental Real Estate

Should A Husband/Wife Form a Limited Liability Company (LLC) to Invest In Real Estate?

A husband and wife formed a Limited Liability Corporation (LLC) that invests in rental real estate to protect themselves in event of a lawsuit. They want to know if they formed the most appropriate business structure and whether their rental

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Posted in Husband/Wife, LLC, Rental Real Estate

Colorado Sales Tax on Vacation Rentals

If you rent a house or condominium to someone for less than 30 days in Colorado it is likely sales tax is owed on that rental. There may also be other taxes owed as well including line items for a

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Posted in Rental Real Estate, Sales Tax

Refurbishing Real Estate for Resale is (usually) Taxed as Ordinary Income

According to Tax Court Memo 2010-261, a husband and wife purchased real estate, refurbished it and reported the sale on Form 4797. They contended the homes were purchased for use as rentals; however, over the three-year period at issue, none of the homes were

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Posted in Capital Gain, Capital Loss, Rental Real Estate

2010 Small Business Jobs Act + Rental Property Owners + IRS Form 1099misc

The Small Business Jobs Act of 2010 is amazingly complex legislation. Some pundits estimate that the provisions offering tax relief will actually 'cost' up to $12 billion. These tax cutting measures were I believe intended to offer incentive to businesses to make

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Posted in Rental Real Estate

What is a Real Estate Professional?

In reviewing James F. Moss, et ux. v. Commissioner 135 TC No. 18 to be a real estate professional, a taxpayer must meet two requirements: (1) More than one-half of the taxpayer’s personal services must be performed in real property trades or businesses in which

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Posted in Rental Real Estate

Residential Rental Income + Expenses – IRS Publication 527

Rental income is any payment you receive for the use of or occupation of property. Expenses of renting property can be deducted from your gross rental income. You generally deduct your rental expenses in the year you pay them. Publication 527,

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Posted in Rental Real Estate
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