Rental and sale of condo

[chuck105]

Three years ago my brother and I purchased a condo for our elderly mother. She lived there rent free until passing away this last February. We then rented the condo to a third party from March through October, 2000, and then sold it this month. My question is, for tax purposes, how do we treat the money received from the third party and, in general, what are our tax liabilities and how do we report the sale? Thank you in advance. This is my first time at this site; what a wonderful resource.

 

[loku]

First, I would suggest you download IRS Pub 523 Selling Your Home at http://ftp.fedworld.gov/pub/irs-pdf/p523.pdf. The Publication has explanations and worksheets for figuring your gain or loss on the sale.

Report the income and expense from the rental on Schedule E of your form 1040. Your net income or loss will be added to or subtracted from your other income.

If you have a gain from the sale of the property, the gain will be taxable as capital gain. If you have a loss, you are not allowed to deduct the loss. This was not your main residence; therefore, the exclusion for gain from the sale of a main residence does not apply. No loss is recognized on the sale of a residence, and the property was not rented long enough to be considered rental property, so the loss can not be deducted because of that.

 

[loku]

Correction of link

I just tested the link I gave you and it did not work. Sorry, use this one: http://www.irs.ustreas.gov/forms_pubs/index.html

 

[chuck105]

Thanks, loku, I downloaded several pertinent publications from that location and I think I now have a handle on how to treat this come April. Many thanks.