4) What would be the taxable gain (loss) on a property given the following infor

Question

4) What would be the taxable gain (loss) on a property given the following information?

            Sales Price                              $5,500,000

            Repairs and Maintenance      5,000

Brokers commission               5%

Depreciation                           1,000,000

Utilities                                   3,500

Original purchase price          4,000,000

Cost of a new roof                  350,000

If possible, please use a financial calculator and show me how to solve as I need to learn this concept for this class.

Explanation / Answer

Listing Down Costs:

Repairs & Maintenance = $5,000

Brokers Commission on Sales = 5%*5,500,000 = $ 275,000

Utilities = $ 3,500

Cost of New Roof = $ 350,000

Remaining Value of house = 4,000,000 - 1,000,000 = $3,000,000

Taxable Gain = Sales Price - All costs - Remaining Value of house = 5,500,000 - 275,000 - 350,000 - 5,000 - 3,500 - 3,000,000 = $2,181,500

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