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If he is making a profit on an investment property, there could be tax consequences and that is all you need to say as you refer your client to his CPA for advice.
Jimmy Williams (352) 8...
Mount Dora, FL
Isn't it too early?
I would tell him to speak to his tax advisor. That protects you, as who knows how someone may interpret your "generic" answer. We are not in the tax business arena. A
A CPA or tax consultant is the best in this case.
The quick and best answer it to tell him to ask his accountant.
Roy nailed this one!
You can look up the answers or call your own tax advisor, so you understand the issue, but never give a definitive answer without referring your client to a tax professional.
Have your buyer check with his attorney or tax professional.
Actually, I never answer questions like this, because capital gains is so complex, espeially with investiment property. I suggest they talk to an attorney who is a tax expert. This stuff is way beyond my pay grade!
Your best bet is to refer him to an accountant....unless that is your area of expertise.
one more part the the potential tax relief is the property would have to be their primary residence for 2 out of the last 5 years. An accountant or tax attorney would be my suggestion for their individual situation, but also have them ask about a 1031 like kind property exchange. This is one way to deferr capital gains, but has lots of restrictions.
There probably isn't a tax professional in our group but that should not preclude us from referring clients to the appropriate person and giving them the right questions to ask that other professional. Im would do the same thing for home inspections - encouraging other inspections if necessary or legal topics to ask an attorney about. We have to give our clients something to ask about when we referr them and not just say, I don't know, I can't give you that advice, good luck.
I would not give anyone tax advice. Ask him to ask his accountant.
Answering questions on taxes is outside my purview as a Realtor and I don't. Too much liability if you give the wrong answer and he listens to you. I suggest to people like that they consult with a tax person.
Even if I where a CPA acting in the capacity of an agent I would have to defer that question over to a tax professional. So even if you knew the answer your professional liability insurance would not help if you happen to get in some sort of litigation by providing "non-professional" advice.
You cannot possibly answer unless you are a CPA. Tax code changes every year so in my book I would say have the name of a tax consultant/CPA that you can defer his questions to.
This is a question to ask an accountant. As a REALTOR I cannot give advice in this area.
For an individual, the first $250,000 that you make on the sale of a property is not taxed. That is also a $250,000 appreciation, so if they bought it for $300,000 and sold it for $550,000, it should be without a tax penalty.
That is for a personal home, not an investment property.
The 'quick and general answer" is that (unless you are a CPA or tax advisor) you recognize that selling real estate may have tax consequences and that you recommend your client consult with their CPA or tax advisor.
Unless you are familiar with the details, refer them to the professionals JJ Canull .
That is a question I wouid not answer, I am their Realtor not their CPA.
JJ Unless you are a tax accountant, I would tell your client to contact their tax accountant.
We can't provide tax or legal advice even if we know the answer.
Yep, the quick answer is that he needs to speak with a tax professional to determine what the tax consequences could be for his particular situation
If it's an investment property there are a lot of variables, so no quick answer, I'm afraid. Probably best to send him to a tax adviser or a CPA.
The capital gain rate is 20 percent, but to the extent you claimed depreciation on this rental property, some of your profits may be taxed at ordinary income tax rates.
Your gain is going to be the difference between your sales proceeds and your adjusted basis in the property. You will be able to deduct selling expenses, including commissions paid on the sale. Your adjusted basis is calculated from when you acquired the property, adding in any capital improvements and deducting the depreciation claimed on the property. The depreciation you have claimed over the past five years is subject to "recapture rules," which means you report some of the gain when you sell the property at ordinary income tax rates and some of the gain at capital gain tax rates.
Where the IRS is involved there's never a quick and simple answer. The process has nothing to do with sale price and everything to do with net gain. Single persons can avoid up to $250,000 of taxable liability while couples enjoy double that amount. It's time to bring in the financial adviser to sort out the best move.
Of course make certain your commentary is coverd by sufficient discalimers.
Questions that need answer are:
Is this an investment property?
Are you a USA Citizen?
Not an investment and a USA citizen. It is highly likey and others have said, the owner is not subject to capital gains taxes from the sale of residental property up to a accumutated capital gains of $250,000 for single and $500,000 for married. ADD more disclaimers here......
Follow that with, "Now, let's price this right and get it under contract before the end of the month. I've got a sign in the trunk. Let's get started."
Don't take my word for it, here is what bankrate says: