Capital gains

Forum|Forum|3 years ago
May 14, 2022
2 replies
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My husband and his 2 brothers owned an investment rental property from 2/2019-12/2021. In 12/2021 my husband and I bought the brothers out and we now jointly own it and rent it out still. If we sell it in 6/2022, would we this be taxed as a long term or short term capital gain?
I know it has to be owned >1 year for it to qualify as a long term capital gain, so since my husband has had it since 2019, would that qualify, or since I was added in 12/2021, would we have to wait till 12/2022 to sell and qualify?

Not A Product Question

Rick19744

Employee

Not sufficient facts to provide some guidance:

What type of entity is the business?
Did you actually purchase your share?
What date in 12/2021 did you buy the brothers out?
Is the entity return filed or on extension?

*A reminder that posts in a forum such as this do not constitute tax advice.Also keep in mind the date of replies, as tax law changes.

abailey3044Author

It’s a single family home that’s rented out.
My husband and his brothers inherited it from their grandfather when he passed in 2019. We bought his brothers out of their share 12/14/2021 for $68,000 and they did a quitclaim deed. We added my name to the deed with my husbands.

Mike9241

his original purchase would be LTCG. assuming equal ownership this would be 1/3 of the sales price vs his tax basis. the buyout since the sale will occur less than 1 year from the purchase will be STCG.

this I no different than your husband buying 100 shares of x in 2019 and then you and your husband buying 100 shares each of x in 6/2021. sell the 300 shares in 5/2022. the 100 shares are long-term and the 200 shares are short-term. the only real difference is part of the gain on the sale of the real property will be subject to depreciation recapture.

Anonymous_

Employee

Since this property has been used as a rental property since it was inherited, have depreciation deductions been taken since the 2/2019 date, @abailey3044?