I'm about to close a short sale and I asked my CPA to calculate my tax liability.  He thinks I'm going to owe quite a bit of $. 

 

My question is if he is doing it correctly.  I bought the property in Oct. 2006 for $390k.  I added a pool in June 2007 for $30k.  I converted it to a rental property in July 2008 (the fair market value (FMV) at that time was $253k.

Amount owed:

1st - $312k

2nd - $78K

3rd - $30k

 

My sales price is $245k.  I thought that the CPA should use the FMV at the time I converted it to a rental and then sutract my depreciation and losses that I'd brought forward each year.  Instead, he showed me with a big gain and he used the adjusted basis???  Any idea who to calculate this.  I've read everything I can find on the subject and I'm more lost than ever.

 

I need a second opinion. 

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Harry,  Thank you for your response.  I've tried Google to find real estate tax experts.  Anyone know a better way?  Is there a buzzword to use.

 

Jason

Dont worry, you loosing on the sale too so this will offset the income.

Here is a good explantion

http://www.justanswer.com/tax/2bnul-short-sale-rental-property-tax....

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