Posted: Mon Nov 09, 2009 1:06 pm Post subject: Capital gains on property acquired through tax sale
We became owners of an office building and home in 2001 when we paid off my father in laws past due taxes. Upon payment, the deeds were transferred into our name. The properties depreciated over the last 10 years because my father in law did not take care of them. We now wish to sell them and are trying to determine how capital gains taxes will be assessed. Please advise. _________________ Need help choosing the right loan? Get free consultation from community lenders/consultant
In order to calculate the capital gains taxes, you will have to determine the adjusted basis of the property. This is assessed on the basis of the original purchase price of the property. If you have made any improvements to the property, you will need to add that to the original price. Then, you need to subtract depreciations on the property. The result you get is the adjusted basis of your property.
Next, you need to find out the net sales price, which is gross sales price minus sales related costs. Once you have the adjusted basis of the property and the net sales price, all you need to do to find the capital gain is subtract adjusted basis from the net sales price. Now, multiply the capital gain by the applicable tax rates to get the amount of capital gains taxes.
jerry
