Sale of Rental Property Denver
The sale of rental property Denver can be a breeze, but only if you choose the best real estate investment company Denver has to offer – and this is exactly what we are here at Denver Property Flip. While selling rental property in Denver can be easy, the IRS makes things even more difficult by throwing in a few twists that make the whole process different compared to the sale of homes in Denver.
In fact, selling your home Denver can be one of the easiest things to do because you don’t need to report the process to the IRS. But with the sale of rental property Denver, it’s crucial that you report all the income and profits that come with it to the IRS in order to avoid any form of auditing.
To the IRS, there’s little difference between profits the sale of rental property in Denver earns you and the money you collect from a rental property on a monthly basis, for instance. If you are not sure about the procedure to use when reporting the sale of rental property in Denver to the IRS, be it if the property was used for business purposes or both business and personal purposes, it’s important that you seek a qualified rental property lawyer in Denver for some professional assistance.
To be in a better position, you need to be able to figure out the capital gains on the sale of rental property in Denver even before going out to seek a rental property lawyer. These can only be determined if you know the current cost of your rental property in Denver and to find this out, the first place is to know the exact amount of money used to buy the property. Note that this figure can be arrived at by including most of the closing costs incurred when you bought the property, but there is no room for mortgage-related costs.
If, for example, the original price of your rental property in Denver is an estimated $100,000 and when paying for it you also parted ways with $1500 in title costs, $1000 in legal fees and $2000 in terms of mortgage, the total cost of your rental property will come to $102,500. As you may have noticed, there’s no room for mortgage-related costs here, but you can include all costs related to improving the condition of the property since you bought it – as long the improvements were aimed at adding more value to the property or making it last longer. In case you’ve spent about $15,000 on a new roof and $10,000 to remodel the kitchen, this total of $25,000 must also be included in the final cost of the home. The result of all these is the adjusted basis.
Then there’s something called amount realized. This figure is arrived at by subtracting the total commission and closing costs paid from the total amount of money you received from selling your rental property Denver. In short, the IRS will let you pull all sale-related costs out of the price before determining the actual amount realized from the sale of rental property in Denver.
Now, in order to determine your gain or loss on sale of rental property Denver, you’ll have to work out the difference between the adjusted basis and amount realized. If the latter is bigger than the former, your sale will have reported a taxable gain, otherwise, the whole sale has been a loss-making exercise. The good side of the story is that with this loss, you can easily offset other taxable gains. You also need to note that the tax treatment of the gain will be determined by the duration of time you’ve owned the rental property in Denver, be it short term for periods less than a year or long term for periods of more than a year.
If you are still reading this and most of it makes little sense to you, there’s an even easier channel to handle the sale of rental property in Denver and it’s known as Denver Property Flip. Simply pick your phone and give us a call on (720) 370-9595 and we will give you the full details of everything you need to successfully sell rental property in Denver right away.
We are here to relieve you from all the hassles involved in selling your rental property in Denver. Call us today.