Alicia Sold Her Personal Residence to Rick

Alicia Sold Her Personal Residence to Rick

Alicia sold her personal residence to Rick on June 30 for $295,000. Before the sale, Alicia paid the real estate tax of $4,425 for the calendar year. For income tax purposes, the deduction is apportioned as follows: $885 to Alicia and $3,540 to Rick.

What is Rick's basis in the residence?

The basis in the residence for Rick can be calculated as follows:
  • Purchase cost of the personal residence = $295,000
  • Real estate tax paid by Alicia before the sale = $4,425
  • Property tax allocated to Alicia = $885
  • Property tax allocated to Rick = $3,540
Now, Rick's basis in the residence will be: $295,000 - $3,540 = $291,460 Therefore, Rick's basis in the residence is $291,460.

What is the basis for Rick in the residence?

$291,460

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