Business and personal use affect vacation home sales
Article Abstract:
Taxpayers contemplating the sale or transfer of their vacation homes can reduce or avoid the recognition of gain on the sale or transfer through careful tax planning. The tax treatment of the sale or transfer depends on the extent of the personal usage of the vacation home of the taxpayer, and can fall into four categories: all personal use, all rental and no personal use, rental for less than 15 days and personal use through the rest of the taxable year, and minimal personal use not to exceed a period of 14 days. Options available to taxpayers in order to achieve a lower tax include: avoiding a current sale for cash through an installment sale; using the property in a trade or business to affect a capital gains treatment for gains on the property; and postponing the sale in order to realize a favorable capital gains differential.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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Sellers reacquiring real property from purchasers can limit recognized gain
Article Abstract:
Section 1038 reduces or eliminates gain recognized on the reacquistion of real property by a seller from a purchaser returning the property in partial or full satisfaction of indebtedness. The treatment is mandatory and is affected regardless of whether the indebtedness is recourse or nonrecourse. Section 1038 applies when the reacquisition furthers the seller's security rights in the property resulting from indebtedness at time of sale. The basis of a reacquired property is the sum of: adjusted basis of all indebtedness of the purchaser secured by such property; the gain recognized by the seller at reacquisition; and the payments of money or property fair market value made by the seller from reacquisition.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1990
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