Hi,
I would like to know how to calculate the capital gains taxes I will owe. I was recently bought out from a commerical property I was part owner of (50%). My father purchased the land in 1989 for $361,000 and in 1994 he quit claimed it to me and my two sisters, so I owned 1/3 of the property. In 2004, we bought out one of my sisters, so I then owned 1/2 of the property. In 2006, when I was bought out, the land was appraised at $980,000 (outstanding loan was $440,000) and I was bought out for $250,000.

Thank you in advance.

AtlantaTaxExpert

Not enough information.

Was the $440K loan assumed or paid off??

What was paid to the sister in 2004?

books0fan

In 2004, when we bought my sister out our assumed loan on the property was $155,000 and we bought her out for $300,000. In 2006, the $440K loan was assumed.

Thank you

AtlantaTaxExpert

Based on what your father paid ($361K), your original basis for 1/3 of the property was $120,333.

When you bought out your sister, your basis increased to $347,833 ($227,500 + $120,333).

Assuming you were responsible for one-half of the $440K loan, your net proceeds was $470,000 ($220,000 for the loan plus $250,000).

Your net capital gain would be $122,167.