ILLMAS Posted October 17, 2016 Report Share Posted October 17, 2016 Let's TP A co-bought a property with friend B back in 2005 as an investment property, A has been reporting 100% of rents, expenses, depreciation...etc since day one. In 2009 they have a fallout and A would like to keep the property and buyout B, property was bought for $500K and appraised for for $800K in 2009, A refinanced the property and paid B $250K half of the original cost and $150K half of the appraised value totaling $400K, A was on the hook for the $800K loan, my question is, would TP A basis increase by $300K for the additional cost to him? Thanks MAS Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted October 17, 2016 Report Share Posted October 17, 2016 Not sure where $300K comes from. Basis was $250K apiece; paid partner $400 for his share; looks like increase in basis of $400 so that TP now has $650 invested in property. This ignores any changes to basis due to reporting depreciation since don't have figures on that. What have I missed? Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted October 17, 2016 Author Report Share Posted October 17, 2016 $150K is correct, it should be half of the $300K. As for the basis of the property as of 2015 is $380K (500-120 A/D=380), the problem is that the additional $150K in basis was never recognized and the property was sold in 2015, unfortunately everything was done on a shake hand deal and now the TP has a gain of about $120K and recognizing the $150K would help him out. Any suggestion on how to handle the $150K now? The refinance happened in 2009 and we are working on 2015 return. Thanks Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted October 17, 2016 Author Report Share Posted October 17, 2016 8 minutes ago, ILLMAS said: $150K is correct, it should be half of the $300K. As for the basis of the property as of 2015 is $380K (500-120 A/D=380), the problem is that the additional $150K in basis was never recognized and the property was sold in 2015, unfortunately everything was done on a shake hand deal and now the TP has a gain of about $120K and recognizing the $150K would help him out. Any suggestion on how to handle the $150K now? The refinance happened in 2009 and we are working on 2015 return. Thanks I wrote this so fast, I made some grammatical errors now that I re-read it, where is the edit function? Quote Link to comment Share on other sites More sharing options...
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