Naviplan Unrecaptured Gain Workaround for Real Estate asset

2011-04-03T15:16:00.000-07:00

Naviplan recognizes accumulated depreciation as capital gain upon sale of a Real Estate asset. This workaround removes the capital gain and recognizes the accumulated depreciation as ordinary income.

The screen shot above shows the asset before adjustments (default).

The screen shot below shows the workaround to the adjusted cost basis for a January 2012 sales date.

The adjusted cost basis equals the original cost basis + total depreciation through the year prior to sale (2011). This will continue yearly depreciation, reduce the adjusted cost basis to the original basis in year of sale, and recognize long-term gain equal to the sales price less original cost.

The screen shot below is how to model unrecaptured gain as imputed ordinary income.

The screen shot below shows cash flow including the unrecaptured gain workaround as imputed ordinary income and the long-term capital gain equal to the sales price less original cost basis.

Supporting data:

From the Desk of Jacque LeFore

Naviplan Unrecaptured Gain Workaround for Real Estate asset