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Firstly you landlord will report the payment as an expense of doing business and he may very well send you and the IRS a 1099 form indicating the payment was made.
You won't be able to hide it and you will be sorry if you try.
It will be reportable by you as a capital gain so taxes will be modest. With NY's share expect to pay out about 28%.
I have no personal experience with buyouts but I do know that what may sound like a lot of money often isn't. You will need alternate housing, and you may find repercussions with your financial aid (only God knows how schools and banks treat capital gains windfalls.)
Practically speaking, if a landlord's first offer is $75K rest assured his LAST offer will be quite a bit higher. Few people get the best deal taking the first offer at anything. You are a fish swimming in a big sea...think twice about that first worm.
(How many bedrooms, what is the rent, location in LES? How many of you are there?)
This is good advice - I would add, get a lawyer who is specifically experienced in tenant buy-outs. They exist, and they will be very familiar with the "market" having settled many similar cases.
if it was me I would take it as a long term capital gain . just make sure your taxes are honest in case they audit it as I said there is no ruling at this point that says yes it is a long term capital gain rate.
be aware nys and nyc do not have any such special rate and it will be taxed locally at regular income rates. only the federal taxes have special reduced long term capital gain rates .
if it was me I would take it as a long term capital gain . just make sure your taxes are honest in case they audit it as I said there is no ruling at this point that says yes it is a long term capital gain rate.
beware nys and nyc do not have any such special rate and it will be taxed locally at regular income rates.
I had thought income below a certain level was taxed at the normal rate ?
i.e., not the capital gains rate.
I had thought income below a certain level was taxed at the normal rate ?
i.e., not the capital gains rate.
huh ? not if it is on capital gains and not regular income. in fact under a certain amount you can qualify for zero capital gains rates . I think for a couple it is 63k but don't quote me, the exact amount I would have to look up.
long term capital gains rates are lower than regular income rates and range from zero to 20% depending on total income. in fact it can hit 24% if you trigger the Medicaid surcharge tax on higher incomes.
we hit 24% for 2015 with those lease rights sales we made..
huh ? not if it is on capital gains and not regular income. in fact under a certain amount you can qualify for zero capital gains rates . I think for a couple it is 63k but don't quote me, the exact amount I would have to look up.
I meant - an individual's income tax rate as opposed to the capital gains rate.
I know far more about the latter ...
I had a friend who mentioned something about this, sold art, earns a modest income and this helped apparently.
long term capital gains on allowed items are much lower than regular rates . art is considered collectables and as collectables are taxed at a max of 28% . they do not qualify for special capital gains rates.
long term capital gains on allowed items are much lower than regular rates . art are collectables and as collectables are taxed at a max of 28% . they do not qualify for special capital gains rates.
That's why I have an accountant with current credentials !
I would strongly urge you to consult a lawyer. You do not mention your rent, suffice to say that I know people who received upwards of $250,000. This is a bargain for landlords, who make the money back in no time (and then some). A lawyer could also help with the income vs. settlement thing, there could be conditions where this would not be considered income ...? you never know.
Rent is around $800 in the lower east side. I think the apartment might also be illegal to live in. There is no insulation, heating is poor, hasn't been renovated / painted for over 30 years, etc. Would I be able to use this against the landlord if I do try to negotiate a better offer?
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