capital gain/ira
Hi Terry, My wife and I are retired. I had been self employed and funded SEP IRAs. We have had no regular income for a couple years. This year I have sold some of my rental properties(single family). They sold for more than what I paid and over the years we have depreciated them….so we will have to pay a recapture on that. Can I defer some of the taxes due on that by funding SEPs and ROTHs?
Terry Says
YOu need a tax advisor this year to help you file your return and let you know how much “recapture” of depreciation will impact your return. Make sure you have ALL the deductible costs as well, so you can add those expenditures to your basis for the properties. Get advice from someone who can review your entire tax picture. (And remember that if you have too large a capital gain, it might impact your Medicare Part B premium costs next year.)
Sorry, but you can’t fund an IRA unless you have “earned” income — not dividends, rents, or capital gains. You could use money from the sales proceeds to fund the IRA — but only to the extent that you also have some earned income from work.
