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Financial Planning / Tax Strategies
|Subject: Re: Home sale selling price reduction issues||Date: 8/19/2010 3:56 PM|
|Author: JAFO31||Number: 110915 of 122521|
jayob: Fort whatever reason, you chose not to address wradicals's question . . .
Why are you accepting less?
"We sold our home in 2007 and carried back an interest only loan. The remaining principal was to be a lump sum payment in five years or less. The value of the home has dropped and we must agree to a reduced price. We paid tax on the portion of the gross profit that was covered by the down payment. Recalculating the profit with the new sale price results in no profit, so in retrospect, we paid unnecessary tax in 2007.
For example: The 2007 sale price was $910,000.
The basis was $350,000,including the cost of sale, thus our gain was $560,000.
The gross profit after the $500,000 exclusion was $60,000. The gross profit percentage calculates to be 6.6%.
We received a $250,000 down payment."
If you received a $250,000 down payment, has the home dropped in value by more than $250,000?
If not, why are you eating any of the loss in value?
Also, I assume arguendo that installment reporting was properly available in the year the sale closed.
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