You're doing well in your financial planning as you enter mid-life, well enough that you've owned...

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You're doing well in your financial planning as you enter mid-life, well enough that you've owned and operated two rental residential properties for a few years. However, managing two properties is more than you have time for, and you sold one of them this year. Make some notes about how the rental related items below affect your net cash flows and draft a schedule of your net rental income or loss for tax purposes. Any income or expenses are monthly figures, unless otherwise noted. Consider any other tax implications of your rental property sale; this website might have some useful info for you. Also, outline what would happen if you took your friend's advice and used $10,000 from your proceeds of sale from the rental property as a) a gift to your spouse or b) a gift to your 13-year- old child. Imagine that either individual would invest the money in bonds that pay 4% interest. What other options might you choose to give $10,000 to either of those individuals? Rental property items: Months rented in the year Rental income/revenue Mortgage principal paid Mortgage interest paid Other operating costs (property tax, etc.) Purchase price (from a few years ago) Ratio of building value to total value Undepreciated capital cost (UCC, beginning of year) Sale price (from February of this year) Property 1 12 3,000 1,400 1,400 1,100 600,000 75% 400,000 N/A Property 2 2 2,000 1,000 1,500 950 500,000 80% 389,750 750,000 You're doing well in your financial planning as you enter mid-life, well enough that you've owned and operated two rental residential properties for a few years. However, managing two properties is more than you have time for, and you sold one of them this year. Make some notes about how the rental related items below affect your net cash flows and draft a schedule of your net rental income or loss for tax purposes. Any income or expenses are monthly figures, unless otherwise noted. Consider any other tax implications of your rental property sale; this website might have some useful info for you. Also, outline what would happen if you took your friend's advice and used $10,000 from your proceeds of sale from the rental property as a) a gift to your spouse or b) a gift to your 13-year- old child. Imagine that either individual would invest the money in bonds that pay 4% interest. What other options might you choose to give $10,000 to either of those individuals? Rental property items: Months rented in the year Rental income/revenue Mortgage principal paid Mortgage interest paid Other operating costs (property tax, etc.) Purchase price (from a few years ago) Ratio of building value to total value Undepreciated capital cost (UCC, beginning of year) Sale price (from February of this year) Property 1 12 3,000 1,400 1,400 1,100 600,000 75% 400,000 N/A Property 2 2 2,000 1,000 1,500 950 500,000 80% 389,750 750,000

Answer rating: 100% (QA)

Net Cash Flows and Schedule of Net Rental Income ... View the full answer