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Capital Gains question.

zarmas01

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Aug 22, 2013
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I have a property that was used as primary residence initially then converted to rental property. My questions is how the capital gains/loss is calculated? Is it calculated from the time the property was first purchased or from the time it was converted to rental? I know when you convert a property to rental from personal residence, it’s considered one has sold the property and immediately reacquired it at fair market value. An expert response is appreciated.

Mark


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DerekYuskiw

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Mar 11, 2015
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Not an expert here but you would only pay capital gains on the years it was used as a rental. If you didn’t have a professional appraisal done when you converted it then most accountants will just have an appreciation percentage to use for the years you used it as a primary residence. That’s what I was told. I did the same but haven’t sold the property yet.


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Matt Crowley

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Dec 14, 2013
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Personal property is currently capital gains exempt.

When it becomes a source of income, the market value when it starts to be rented (get a CMA or appraisal) is the starting cost basis. Higher appraisal you can get the better.
 
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