Schedule D and sale of home...

From: Christy Rohrig <christy@netwiz.net>
Subject: Schedule D and sale of home...
Date: Tue, 26 Jan 1999 16:02:25 -0800

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Hello all,
    Just wanted to give my input on two questions asked in the last digest (I
received).

The page 2 of Sch D is a calculation that assesses a 20% tax rate on your capital
gains (or 10% if your in the 15% bracket).  It can be confusing when doing it by
hand, so read the lines carefully and as a check compair the tax you get:
    From tax table:  taxable amount - long term capital gains
    + 20% of your long term capital gains.  These numbers should match.

I believe this formula gets complicated if your close to the border of 15% to 28%
tax rate.

On sale of the house where 2 apartments were added.  You can completely deduct any
gain on your personal residence up to $250k ($500k if married) given that you have
owned it for 2 of the last 5 years and lived in it for 2 of the last 5 years.  You
sound like this is not a problem.  On the sale of the 2 rental units, you will
need to look at the basis, probably close to zero as you should have been
depricating the cost for the improvements and recognize the gain on that portion
of the property.  One common method of splitting the value is by personal sq ft /
total sq ft.  You will have a taxable gain from the rental property.  You may be
able to do a 1031 exchange if you are interested in purchasing another income
property.  Talk to a tax advisor / 1031 specialist before selling this if you're
interested in doing this.

Regards,
- -Christy


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