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.
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.
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.
Dont worry, you loosing on the sale too so this will offset the income.
Here is a good explantion