Tax Classification Of Partial Note Sale?
We sold an apartment complex and carried back a note. Note was amort. over 30 years, PI payments, with balloon in 3 years. We then made a partial note sale, selling the 3 years of PI payments and a small portion of the remaining principal in the balloon.
We received a 1099 for the note sale. Problem: our tax advisor does not know how to classify this.
any suggestions for those that may have done something like this in the past?
I would compute your basis in the partial that you sold. The difference between your basis and your actual sale price would represent a capital gain or a capital loss on the sale. The gain or loss on the sale of your partial retains the long term, short term, or ordinary income treatment originally determined for the installment sale.
For the balance of the note that you retain, you simply suspend receiving taxable installments for three years.
Just my opinion, rightly or wrongly. I have never sold a partial, much less done an installment sale
1040 Line 21 Miscellaneous Income....
Quote:If I sell a property, and I have an ex tenant that is still paying me back for delinquent rent, how do you handle this in your taxes.
If I sell something in 2006, what do I do with the payback they make to me in 2007? ... would I still do a Schedule E for 2007 on the property if I have post 2006 sale related income on it?tcikevin,
Yes, you can still do a Schedule E on this property. You will show rental income with no expenses.