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-   -   Capital gains tax from buy-out (https://www.askmehelpdesk.com/showthread.php?t=25462)

  • Apr 29, 2006, 10:29 PM
    books0fan
    Capital gains tax from buy-out
    Hi,
    I would like to know how to calculate the capital gains taxes I will owe. I was recently bought out from a commercial 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.
  • Apr 30, 2006, 11:40 AM
    AtlantaTaxExpert
    Not enough information.

    Was the $440K loan assumed or paid off?

    What was paid to the sister in 2004?
  • Apr 30, 2006, 02:12 PM
    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
  • Apr 30, 2006, 05:57 PM
    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.

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