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Author: arlr Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121482  
Subject: Capital Gain on Mortgage Payoff Date: 12/24/2000 4:59 PM
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In 1995 I sold a piece of commercial property I acquired in 1976.
I sold the property with a seller financed mortgage and used the gross
profit formula to pay capital gains on the sale each year.

In 2000, the buyer paid off the mortgage outstanding, leaving a residual capital gain on the sale.

Are there any special capital gain preferences on the mortgage payoff of
the residual capital gain?????

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Author: RooCat Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 43352 of 121482
Subject: Re: Capital Gain on Mortgage Payoff Date: 12/24/2000 6:34 PM
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In 1995 I sold a piece of commercial property I acquired in 1976. I sold the property with a seller financed mortgage and used the gross profit formula to pay capital gains on the sale each year.

In 2000, the buyer paid off the mortgage outstanding, leaving a residual capital gain on the sale.

Are there any special capital gain preferences on the mortgage payoff of the residual capital gain?????


It will be taxed just as the prior capital gains were which should have been long term capital gains. Other than the fact that it is long term capital gains, there is no preferencial treatment just because the buyer paid off early. The balance of your capital gains on the property will be taxable this year.

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Author: arlr Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 43355 of 121482
Subject: Re: Capital Gain on Mortgage Payoff Date: 12/25/2000 12:42 AM
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The balance of your capital gains on the property will be taxable this year.

Thanks RooCat,

I suspected as much.
The laws do change however.

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