Video instructions and help with filling out and completing Who Form 4797 Rental

Instructions and Help about Who Form 4797 Rental

You Music welcome back to our Channel clear value taxes my name is Brian Kim I'm a certified public accountant so one of the partners at our tax practice so this is gonna be a quick tip video about the sale of properties but for instances in specific so the first one would be CL the primary residence the second would be sale a rental property the third one would be 1031 exchange and the fourth one is a home flip okay so it's gonna be very quick tip if you want to know more in-depth about one of these please leave me a question or comment below I'd be happy to make a video about one of these as well okay so the first one is to see how the primary residence you know as many of you know you can exclude the primary residence exclusion lets you exclude up to $250,000 for a single 500,000 for married filing jointly so even though that you're within those limits so you know it's gonna be a tax-free gain on the primary residence gain you should still report it if you got a 1099 s you have to report it if you don't you're gonna get a nasty letter from the IRS saying that you owe up to you know hundreds of thousands of dollars because they're gonna think the whole home sale was a game so if you got 1099s or if you just want to report it anyways because you fall within the exclusion limits just to report it because one if you got the 10 on us you have to and second you know you don't want that nasty letter so just report it you know it's gonna be all tax-free but just make the adjustment so please report it so second is okay the 1031 exchange what a lot of people they don't know what the 1031 exchange is that oh I'm gonna sell it for a gain and I'm just gonna I'm gonna buy you a house within the time limits it's gonna be a 1031 exchange and everything's gonna be good it's gonna be tax deferred no it doesn't work like that you need to use a third-party intermediary you can't just sell the home and then just continue on as normal and then just buy something you know within a few days no you got to do it properly through a 1031 intermediary and that money can never your hands which means that you're gonna be half you're gonna be working with an intermediary for for you to do a proper 1031 exchange so if you're thinking 1031 exchange just know that you know you can't do it yourself you need a third party you know to provide you the 1031 exchange services so if you're going to 1031 route you need someone to facilitate that to be the intermediary that third party and there's even restrictions on who your third party can be so just please be mindful of that if you haven't explored the details of a 1031 exchange then please read up on it before you know acting upon it and getting yourself into trouble and disqualifying for the 1031 exchange okay the next one is gonna be sell a rental property just know if you're planning to sell the rental property you know hopefully you're doing this beforehand you know if you want to see what the tax consequences are please take into consideration that depreciation recapture so basically what that is it's the depreciation deductions that you are taking throughout the course of when it was a rental property you know that was benefiting you or it's been accumulating in your accumulated losses you know which you will be able to use upon disposition of the sale however please take into consideration that depreciation recapture and that's taxed at 25 percent if you don't know what I'm talking about this this doesn't make sense to you well please look into it or ask your accountant or ask me because you know each year that you've been receiving the depreciation deduction it's been adding up you know there's a running balance on your depreciation recapture so if you're not taking that into consideration well then you can have a big tax bill you know waiting for you and you don't even know it you know for example let's just say you bought a home for $300,000 and you're renting out a rental home and then you've been taking a depreciation deduction for ten years okay if you sell the property for $300,000 you know in ten years then you did not break even you probably have a really big gain and you don't even know it because the depreciation reduces your spaces that's the depreciation recapture so please take down to consideration the depreciation recapture or ask your content about it okay the last one is a home flip so what does this mean it's you're buying a home and your intention and motivation is to fix it up as quickly as possible put it on the market and sell it as quickly as possible so it's not you're not trying to have a rental property it's not you know a long-term hold it's it's not a capital gain basically if you're going to do a flip transaction like this just remember it's taxed at regular ordinary income rates and it's subject to self-employment tax as well so it's not going to be a capital gain if you're doing a flip transaction and even if you held the property for more than a year you know which would be bad because the whole point of a flip transaction is to sell it as quickly as possible it's gonna be regular income on the Schedule C so it's not going to go on the the Schedule D it's not going to be a capital gain it's gonna be regular ordinary