World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

Merger & Acquisition FAQ – August 2015

Q: What forms do we file to report a loss on the sale of a rental property?

A: Rental property is income-producing property and as such, considered business property. Report the loss on the sale of rental property on form 4797 Sales of Business Property. Normally, you transfer the loss as ordinary loss to line 14 of form1040, U.S. Individual Income Tax Return.

Q: I have heard that I can sell my rental property and use the proceeds to purchase rental property of equal or greater value and the transaction is viewed just like an exchange in that the tax is deferred until the new property is sold. Is this true?

A: Yes. What you have heard about is a transaction called a like-kind exchange. A like-kind exchange, when properly executed, can postpone the recognition of gain (and resulting current tax) essentially by shifting the basis of property sold to like-kind replacement property.

Q: I am renting a house to my son and daughter-in-law. Can I claim rental expenses?

A: In general, if you receive income from the rental of a dwelling unit, such as a house, apartment, or duplex, you can deduct certain expenses. There is no exception based on the relationship to those who live there.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors