Question
(Show all work in excel if possible) A retail property was acquired on April 12 of year one with $750,000 of cash and $3,500,000 of
(Show all work in excel if possible)
A retail property was acquired on April 12 of year one with $750,000 of cash and $3,500,000 of debt. The mortgage was a 20 year term, 5.75% fixed rate, fully amortizing.No loan fees because the owner accepted a higher interest rate. The owner did not make any capital improvements to the property during the hold period.
The property was sold on the April 11 of year eight for $ $5,800,000 with closing costs of 4.75%.
The owners Tax rates are 39% ordinary Income, 27% depreciation recapture, 15% capital gains
Tax Assessment for this property is as follows:
Value
$(25%)
Land
$(75%)
Improvements
$4,250,000 (100%)
Total
- What is the monthly mortgage payment?
- What is the mortgage balance at disposition?
- What are the Sale Proceeds Before Tax?
- What is the Ordinary income Tax due at Sale?
- What is the basis of this property at acquisition?
- What is the Annual Depreciation (full year)?
- What is the first year depreciation?
- What is the depreciation recapture deduction for the year of disposition (how much depreciation has the owner taken over the hold period (in dollars))?
- What is the depreciation recapture tax due?
- What is the gain on Sale?
- What is the Capital Gain amount (dollars)?
- At a 18% Capital Gain rate, what was the capital gain tax to the owner?
- What is the SPAT?
Reminder: Calculations for SPBT and SPAT is below
Sale Price
- Cost of Sale
- Mortgage Balance
=Sales Proceeds Before Tax
- Tax (Savings) Ordinary income (Investors Ordinary Income Tax Rate)
- Tax on Straight Line Depreciation
- Tax on Capital Gains
= Sale Proceeds After Tax
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