michaelmars Posted September 14, 2011 Report Share Posted September 14, 2011 Interesting situation: taxpayer lived in co-op for 5 years, then rented it for about 5 years, then their mother lived in it and it was treated as a 2nd home for about 5 years. Mom dies and the apartment is vacant for a year or so while trying to sell it. Should carrying costs be treated as investment expense and added to cost basis from the time Mom died to the sale? Quote Link to comment Share on other sites More sharing options...
OldJack Posted September 14, 2011 Report Share Posted September 14, 2011 No. Carrying cost was on a 2nd home status. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted September 14, 2011 Author Report Share Posted September 14, 2011 I tend to agree but what if they can prove they tried to get a tenant before they listed it for sale putting it back into rental property status? Quote Link to comment Share on other sites More sharing options...
OldJack Posted September 15, 2011 Report Share Posted September 15, 2011 Why would trying before listing have anything to do with it? It was not rental property at the time of the cost incurred. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted September 15, 2011 Author Report Share Posted September 15, 2011 mom dies, the kids list it for rent, after a few months of no bites they decide to sell. Just thought that intent might work here. Quote Link to comment Share on other sites More sharing options...
Pacun Posted September 15, 2011 Report Share Posted September 15, 2011 Not that matters, but it will help us understand your position, is there a profit o loss on the sale? Quote Link to comment Share on other sites More sharing options...
OldJack Posted September 15, 2011 Report Share Posted September 15, 2011 mom dies, the kids list it for rent, after a few months of no bites they decide to sell. Just thought that intent might work here. Its an argument that might work, but I would not want to make it and would expect to lose. Quote Link to comment Share on other sites More sharing options...
michaelmars Posted September 15, 2011 Author Report Share Posted September 15, 2011 A Profit. i was thinking of adding the maintenance etc while trying to rent as additional basis on investment. I appreaciate your opinion Jack and as i said, i tend to agree but i wanted some other imput on this. They also have suspended losses from when it was a rental and some depr recapture so there is a lot of stuff in this little sale. Also the numbers aren't that large to really make much difference in the long run, a year of maintenance is about $8000 even if deducted at cap gain rates it wouldn't be a major tax savings. gain is about $150000 with a few thousand of recapture and $28000 of 1250. Quote Link to comment Share on other sites More sharing options...
Pacun Posted September 15, 2011 Report Share Posted September 15, 2011 Either way you will have the same results, so the IRS wouldn't care if you add it to the basis or use it on Sch E. Now, if it is personal, then it is not deductible. I would go with intent, provided the unit was ready to be rented and efforts were made to rent it. (Keep the records). Quote Link to comment Share on other sites More sharing options...
michaelmars Posted September 15, 2011 Author Report Share Posted September 15, 2011 i wasn't even thinking of taking on E but i guess that is more consistant, and more bang for the buck at a higher tax rate. i have to make sure they can prove intent to rent. thanks all! Quote Link to comment Share on other sites More sharing options...
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