What is that? I don’t even remember reading about it!
canadiananalyst Wrote: ------------------------------------------------------- > What is that? I don’t even remember reading about > it! Alternative Investments ERAT = selling price - selling cost - mortgage balance - taxes on sale
important concept and calculation make sure you know differences b.t recaptured depretiation and captial gain
Alternative Investments, I believe its the chapter at the beginning. I missed this one too. Spend 15 minutes and you should get it.
Reading 47. Not too difficult like Janardhanc said, just focus on the difference in cap. gain and dep. Also remember to determine your depreciation recapture number based on the net selling cost and not on gross selling cost.
its your selling price of the property minus selling costs. then you subtract the oustanding debt portion ( principal repayment), and finally you subtract any taxes. if you have a capital gain when you sold the property, aka your selling price minus selling costs is higher than your net book value, you would recapture all the accumulated depreciated back, and tax it at the given rate. you would then also subtract the accumulated depreciation from your capital gain, and tax the remaining amount at the capital gain rate. then just subtract the calculated taxes and you should end up with your after tax equity reversion. i stand to be corrected however, any input would be appreciated…
Ya it’s in the mock but I had no idea how to calculate it. Will def look at the reading. Thanks!