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Selling a bed and breakfast & taxes

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JunieBJones (JBJ)

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I will be contacting our accountant, but before I do, can you tell me what taxes you believe will be payable when you sell your Bed and Breakfast?
I have not sold one, only bought, so wondering what taxes we need to hold $ for? We have owned it for 6 years. Depreciation and business side. Any food for thought? Good to have the ducks in a row - exit strategy in place. Thanks.
 

muirford

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I think the biggest issue to deal with is the recapture of depreciation that you have claimed. But, that is all I really know, and you really should talk to an accountant. There is an excellent one in Lexington who deals with B&Bs all the time.
 

Breakfast Diva

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If you sell your B&B and you have made a profit (capital gains), you will have to pay up to 28% tax of the capital gains. The fact that you are asking this question now and not before you listed your B&B scares me. Don't walk, but RUN to a financial advisor!
 

EmptyNest

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Yes, the others are correct about capital gains and depreciation. I don't know exact but I know talking to the folks we bought from..they got hit BIG TIME in taxes and they said they wished they had done it differently. Better talk to Raetz and Hawkins in Lexington..they are the ones Muirford mentioned.
 

egoodell

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I think the biggest issue to deal with is the recapture of depreciation that you have claimed. But, that is all I really know, and you really should talk to an accountant. There is an excellent one in Lexington who deals with B&Bs all the time..
I do know that when the Hummingbird sold he bought a home and a cottage and rents the cottage out and avoided capital gains that way. But note that was probably over 5 years ago and the rules are always changing.
There was also a situation where if you stopped operation for two years and then sold you avoided paying the taxes but I have also heard that one has gone by the wayside.
Riki
 

EmptyNest

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I think the biggest issue to deal with is the recapture of depreciation that you have claimed. But, that is all I really know, and you really should talk to an accountant. There is an excellent one in Lexington who deals with B&Bs all the time..
I do know that when the Hummingbird sold he bought a home and a cottage and rents the cottage out and avoided capital gains that way. But note that was probably over 5 years ago and the rules are always changing.
There was also a situation where if you stopped operation for two years and then sold you avoided paying the taxes but I have also heard that one has gone by the wayside.
Riki
.
Yes that 2 year rule was what we were planning for... but I believe it was muirford who stated here a while back that it has now gone away.And we will still be responsible for paying back those costs we depreciated I believe... We aren't selling anytime soon, so maybe things will change again.
 

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