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Posted by Rita on February 8, 2007, 11:51 pm
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I am taking out a 2nd mortgage or maybe home equity loan to
pay off my ex for his share of our home. Can I add this to
my cost basis of the home? I don't want to pay capital
gains on his equity should I turn this into a rental.
Thanks!
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Posted by Paul Thomas, CPA on February 10, 2007, 6:05 am
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> I am taking out a 2nd mortgage or maybe home equity loan to
> pay off my ex for his share of our home. Can I add this to
> my cost basis of the home? I don't want to pay capital
> gains on his equity should I turn this into a rental.
Not in a division of assets, no. Your cost basis would
include the entire original purchase price of the house.
Any amount you pay him in a divorce is just a division of
assets and does not increase your basis.
--
Paul Thomas, CPA
paulthomascpapc@bellsouth.net
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Benjamin Yazersky CPA on February 10, 2007, 6:05 am
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> I am taking out a 2nd mortgage or maybe home equity loan to
> pay off my ex for his share of our home. Can I add this to
> my cost basis of the home? I don't want to pay capital
> gains on his equity should I turn this into a rental.
taking a mortgage doesn't add to basis
___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] >>>
-----> real address on hobokeni or hobokenx <-----
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by A.G. Kalman on February 10, 2007, 6:05 am
Please log in for more thread options Rita wrote:
> I am taking out a 2nd mortgage or maybe home equity loan to
> pay off my ex for his share of our home. Can I add this to
> my cost basis of the home? I don't want to pay capital
> gains on his equity should I turn this into a rental.
A mortgage is not a capital improvement. It does not add to
cost basis. As it is not acquisition debt, you can deduct
the mortgage interest you pay on only $100,000 unless the
loan plus other loans exceed the fair market value. Then the
deductible interest may be limited to an amount less than a
loan value of $100K.
--
Alan
http://taxtopics.net
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by San Diego CPA on February 10, 2007, 6:05 am
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> I am taking out a 2nd mortgage or maybe home equity loan to
> pay off my ex for his share of our home. Can I add this to
> my cost basis of the home? I don't want to pay capital
> gains on his equity should I turn this into a rental.
If you're using the loan proceeds to buy out your ex's share
of the house, then yes, the amount your pay your ex (i.e.,
the purchase price - not necessarily the total loan amount)
is added to your cost basis.
If you convert to a rental, there's no gain to recognize
until you sell the property.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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