Can Form 4797 Investors 2024-2025

Hey everyone, it's NIC Jerusalem here at the Joyce, part of the happy home team. We're wrapping up our quick little video series about tax consequences when selling a home. In our previous two videos, we had talked about what happens if you're selling your primary residence. Whether you sell it within a two-year period or you've owned it for a long time. Now, let's discuss what happens if you're selling a property that isn't your primary residence - like an investment or rental property. What are the tax implications in those circumstances? Well, there are two scenarios to consider, Nick. First, let's imagine the property was always a rental property and you never lived in it. Then, we'll discuss the situation where you once lived in that property. So, if the property was always an investment property and you owned it for over twelve months, any profit you make from selling it is considered capital gains. However, if you've been using it as a rental property, you are required to take depreciation recapture into account. Here's an important thing to note - even if you didn't actually depreciate the property, the rules still say that you have to recapture what you should have done. So, if you're doing your own tax return, make sure you're doing it correctly. When you sell the rental property, we need to calculate the basis. The basis is what you purchased the property for plus any improvements you made. After that, we subtract the depreciation recapture from the basis. Let's say you purchased the property for $300,000 and made $100,000 in improvements. So, the basis becomes $400,000. If you depreciated it by $50,000 over the years, we subtract that from the basis. Now, the basis is $350,000. Let's assume you sell the property for $500,000. The gain would...