You might think selling a piece of real estate is a simple tax situation, but you would be wrong. Many considerations need to be thought out. Not the least of which is determining the original basis and the adjusted basis at time of sale. When you know your basis you can determine if there is a gain or loss on sale. If there is a gain you may also have depreciation recapture. The worst thing that can happen though is that inadequate records were kept.

BASIS

Determining the proper basis is not as easy as looking up the original purchase price. It is not uncommon that investors spend time and money in the acquisition process. You might have travel expenses related to your inspection of the property; you might have hired someone to inspect various properties for you. Many of these due diligence costs must be added to the basis of the property you purchase. When you purchase the property there are also acquisition costs paid, like a title search and recording fees. Loan related fees are not added to the basis of a property.

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