Installment sale of real estate
I want to enter an installment sale of real estate. I presently own the interest and will sell it in a few years. In the meantime, I receive rental income. Once I sell it, I will receive installment payment of principal and interest for seven years.
I entered the capital gain portion of the principal payments, separately the return of basis portion of principal payments and the interest portion in Special Receipts, each having the applicable tax attribute.
So I want to enter a future sales price of zero for the real estate, but can't seem to do that in the program.
In effect I'm showing the income from the note plus the sale at some price that the program is calculating. I've tried various ways to force the selling price to zero with no success.
The only way I seem to get no "income" from the selling price is to set the current market value and basis equal to zero.
Suggestions?
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Comments
Burt Peterson
Sat, 02/06/2016 - 15:46
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When I set the value and
When I set the value and basis to zero, the rental income amounts still show in the assumptions but no income is shown in the report.
Not sure what's going on there.
dan royer
Sat, 02/06/2016 - 17:45
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It seems you are trying to
It seems you are trying to use some features of the Rental area of the program and not others. Why, for example, not let the program calculate cap gains for you?
But if you want to manage all of this as special expenditures and special receipts, you can do that. Just don't use the real estate area and manage it all as special receipts/expenditures as you are sort of doing now.
Or, enter the value of the property and the sale price of the property--which should be the same I guess, and let the program calculate the cap gains and the 6% commission on sale if that applies, and then create a special expense in the same year of the sale to get rid of the sale receipt that the program attributes to you. Say you sold it for 10K you could create a special expense of 10K to get rid of that receipt. Then give the 10K back to yourself as special receipts in whatever amortized payment agreement you have--say 2K per year for five year or whatever. Would that work?
Burt Peterson
Sun, 02/07/2016 - 23:29
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Good clarifications.
Good clarifications.
Since there is no capital gain, actually a loss, the program is not allowing the sales price that I am entering, it seems.
Not sure how to enter a capital loss, where the basis is more than the sales proceeds.
I'll probably just use the special receipts/expenditures for all of it.