Capital Gain Tax reduction

4 Replies

Sold the condo earlier this year and facing couple K's in capital gain tax since it was a rental for last five years. 

While I guess I should be happy to face that problem but still would be nice to be able to reduce the tax.

Any creative but legal ways to adjust the base to reduce the taxes (I.e. how to handle HOA dues... Etc.)

Thnx

HOA dues should have been an expense - they're not capitalized. Regardless, everything you spent on the property during the time it was a rental should have been either expensed or capitalized....you can't have it both ways! Did you make any capital improvements (i.e. appliances, HVAC, etc.) that haven't yet been capitalized?

Although we all want to minimize taxes, having a gain to be taxed on isn't such a bad thing!    Better than taking a loss and looking for gains to offset it against!

To echo Chris above, and in broad strokes, comb your records and look at capital projects for upping your basis, and they likely would have come in the form of an assessment, like for something major such as a new roof, new siding, etc or something you paid for the interior, then study up how to adjust your basis or see an accountant.. Repair and maintenance versus capital improvement can be tricky, and even some of the transaction fees can be looked at in the analysis of your actual gain.. Then you have to adjust basis downward looking at depreciation, too.. May be a good year for an accountant or good tax guide....adjusting basis at sale is page 172-175 in fishmans book I have seen cited on Bo some (designed as tax for landlords) or a cpa may be worth the fee if the amount is substantial....

Next time, perhaps consider a 1031 exchange.  Although for only $2k in cap gains tax, it may not be worth the cost, and requirements.

Thank youfor responding 

I agree it is good problem to have. ;) just ca. 20k is little high.

I did live in the property for 5 years and rented for another 5, so I was hoping that HOA from the first 5 years that condo used to fix the leaking roof and elevator and garage door could be somehow counted against my base.

Also what about excise tax?

Thank you