MsTabbyKats Posted April 8, 2015 Report Share Posted April 8, 2015 I have no experience with this.... Client bought a property he was planning to rent in 2014. He didn't rent it...and he spent a lot to upgrade. His income is too high to take a loss for 2014. I was planning on just doing the E...since he "planned" on renting it out. Now he decides he wants to sell it (I assume for more than he paid...including the upgrades) What happens? Should I bother with the E? Will it be a short term gain? Will the disallowed loss (if I do an E) from 2014 be deducted from the gain? TIA Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted April 8, 2015 Report Share Posted April 8, 2015 Did he place in service in 2014? Advertise for rent but received no applicants? Sometimes plans don't work out but if it was placed in service, renters actively sought, I would prepare the E. In my opinion, too bad if he couldn't take the loss. Presumably this wise investor knew what he was doing. If he just 'planned' on renting it without even trying, then I would consider it an investment property for 2014 and crunch the numbers when he sells. 1 Quote Link to comment Share on other sites More sharing options...
MsTabbyKats Posted April 8, 2015 Author Report Share Posted April 8, 2015 No...he didn't rent...or try to rent. He was busy upgrading. So...are you saying....I should do nothing for 2014...and just leave it for 2015? And, if it's a gain...it's just a regular short term gain on an investment? Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted April 8, 2015 Report Share Posted April 8, 2015 It appears as though nothing reportable happened in 2014. If it is sold in 2015, report it then, sale or rental, as the details dictate.One of my clients did just the opposite. Bought and rehabbed a property intending to flip it with a nice gain. It didn't sell so he rented it in January. There was nothing to report in 2014 but will be in 2015. 1 Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted April 8, 2015 Report Share Posted April 8, 2015 Sounds like it was never placed in service as rental property because he changed his mind before he made any effort to rent the property. As far as whether it is long or short term, I would say that depends on how fast he is able to sell the property. It would be a capital gain in any event. 1 Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted April 8, 2015 Report Share Posted April 8, 2015 I agree with both Margaret and Gail with this scenario. Follow their guidance here. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted April 9, 2015 Report Share Posted April 9, 2015 to answer your other question, if he did try to rent it and had suspended loses, those loses are ordinary losses upon sale and not a reduction of capital gain. they are worth more due to the differences in tax rates. Quote Link to comment Share on other sites More sharing options...
MsTabbyKats Posted April 9, 2015 Author Report Share Posted April 9, 2015 to answer your other question, if he did try to rent it and had suspended loses, those loses are ordinary losses upon sale and not a reduction of capital gain. they are worth more due to the differences in tax rates. Michael I sent you a pm Quote Link to comment Share on other sites More sharing options...
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