Rental Real Estate Purchase


M

Mark C Paulette

I signed a Letter of Agreement on a piece of property that is $X. The
Appraisal came in @ X+3K. When I buy it a X how do I account for the 3K step
up in basis? Do I show it as unrealized gain and Depreciate at the higher
amount? Can I contribute the 3K as a loan to the Business?

Thank you in advance.
 
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P

Paul A. Thomas

Mark C Paulette said:
I signed a Letter of Agreement on a piece of property
that is $X. The Appraisal came in @ X+3K.
Grreat! You're one lucky dude.

When I buy it a X how do I account for the
3K step up in basis?
What "step up in basis"? Your basis is what you paid for it. Not one penny
more.

Do I show it as unrealized gain
No. But, I am willing to buy the property from you at exactly what you paid
for it, then sell it back to you for $3000 more, so you can have a higher
basis.

and Depreciate at the higher amount?
No. Depreciation is based on your purchase cost, less the amount allocated
to the land, plus any improvements you make (and PAY FOR) to the building.

Can I contribute the 3K as a loan to the Business?
Yes, but that doesn't increase the basis of the property.
 

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