How to Report the Sale of Investment Property on Your Tax Return

How to Report the Sale of Investment Property on Your Tax Return

Selling a rental property falls under different taxation rules than selling your primary home. When you sell a rental property, it is considered the sale of a business asset and treated differently. You must report the sale to the IRS, and it is critical to know what to report and where to report it.

Jul 1, 2024

Are Refinance Closing Costs Tax Deductible on Rental Property?

Are Refinance Closing Costs Tax Deductible on Rental Property?

Among the attributes of real estate investing that appeal to investors are the tax advantages that investors can use. First, the investor can deduct the costs of owning, maintaining, and operating rental property. This ability helps to reduce the taxes you pay on income from rental property. Deductible expenses include mortgage interest, property taxes, maintenance and repairs (not improvements), marketing, and similar items.

Jun 28, 2024

What Is a Section 1411 Trade or Business?

What Is a Section 1411 Trade or Business?

In a recent blog, we explained the ins and outs of net investment income (NIT) and net investment income tax (NIIT). That blog pointed out that under 26 U.S. Code § 1411 - “Imposition of Tax,” NIIT is generally assessed on investment income and entities (i.e., estates, trusts, and individuals) with income higher than statutory threshold amounts.

Jun 26, 2024

What Is a Section 351 Transfer?

What is a Section 351 Transfer?

A transaction involving Section 351 of the Internal Revenue Code is a straightforward means for an individual to transfer property to a corporation in exchange for stock. This is without recognizing a gain or loss. Property transfers must be made in exchange for stock in the corporation. Immediately after the transfer, the transferor or transferors must then control the corporation that received the property. Control is defined as possessing at least eighty percent of voting rights and eighty percent of non-voting stock.

Jun 26, 2024

Are Legal Fees Tax-Deductible for Investment Property?

Are Legal Fees Tax-Deductible for Investment Property?

Before filing your annual tax return, you should always check what deductions and tax credits you may qualify for. There’s a good chance you incurred a few legal fees while acquiring your investment property or due to other business-related matters. If you sustain legal fees for your investment property, they may be tax-deductible.

Jun 25, 2024

What Is the Biggest Tax Shelter for Most Taxpayers?

What Is the Biggest Tax Shelter for Most Taxpayers?

Nobody likes paying Uncle Sam too much income in taxes. To reduce tax liabilities, taxpayers seek out tax shelters. A tax shelter reduces taxable income, resulting in a lower tax bill.

Jun 23, 2024

Can You Buy a Multifamily Property With an FHA Loan?

Can You Buy a Multifamily Property With an FHA Loan?

FHA loans are part of a federally backed program that enables people with a lower down payment, credit issues, or other financial concerns to buy a home. A common question we often hear is, “Can an FHA loan be used to buy a multi-family property?”

Jun 22, 2024

How to Write a Relinquishment Letter for a Property

How to Write a Relinquishment Letter for a Property

When gifting property to an heir or relative, what is a simple or quick method of initiating the transaction? In real estate, there aren’t too many simple or quick things. There is a lot of paperwork and even various parties involved in completing specific transactions, and all of this can vary from state to state.

Jun 21, 2024

Who Pays Capital Gains Tax on a Deceased Estate?

Investors want to preserve and enhance the value of the assets they can distribute to their heirs. When a person dies, their assets typically enter probate for distribution. An asset's value is determined before disposition during probate. That's one reason why the step-up provision of capital gains taxation is an integral aspect of estate planning.

Jun 20, 2024

How To Record A 1031 Exchange

How To Record A 1031 Exchange

Recording a 1031 exchange properly is crucial. This involves filling out IRS Form 8824 and submitting it with your federal income tax return. Each individual 1031 exchange you undertake within a tax year requires a separate Form 8824 to be accurately recorded. This form provides a detailed account of both the relinquished and acquired properties involved in the transaction. By diligently recording this information, you ensure the IRS knows the capital gains deferred through your 1031 exchange.

Jun 19, 2024

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