Determining capital gains
How do I determine my capital gains on a property I used to own with a partner but refinanced to solely own? What amount is used?
Thank you very much for your question. Unfortunately, we try not to give specific tax advice here because individual circumstances can vary so widely.
That said, here are a few things that will determine the tax implications if you see this property.
1. Was there a recorded change in ownership when you refinanced the property? For instance, did you own the property with a partner and then buy it personally when you refinanced or did the ownership change to another company that you own? If this is the case, then your previous transaction was probably a taxable event and your current basis in the property would be the recorded purchase price when you refinanced.
2. Was there no recorded change in ownership when you refinanced? If there was no recorded change in ownership then your tax implications for this property are a bit murkier. You would be well-served by working with an accountant to determine your and your partner’s relative basis in the property to see what your individual tax liabilities will be if you sell.
3. Did your former partner sign on the refinancing? If this is the case, then they can theoretically claim a continued interest in the property, which will also impact your taxes.
Obviously the tax implications of selling a property – especially one whose ownership structure has changed during your hold period – can get pretty complicated. For that reason, we recommend working with a licensed attorney to better understand all of the tax implications of selling a property.
If you’d like to learn more about how capital gains taxes work and some ways to save money when selling properties, be sure to check out our article on the Top Rental Property Tax Benefits and Deductions here: https://fitsmallbusiness.com/rental-property-tax-benefits-deductions/
Best of luck,
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