Profile picture for edilu96

I have a rental property with a significant amount of equity. What is my capital gain tax?

450k equity My annual income is 120k
  • July 17 2014 - West Covina
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Answers (4)

Your capital gains tax is a function of your purchase price of the property + capital improvements - depreciation taken = your basis in the property.  That number subtracted from your sales price (less closing costs) will be your capital gain.  The good news is I'm sure your tax preparer can help you with the calculation and an understanding of what your tax liability would be if you elected to sell the property.  A 1031 exchange can alleviate the tax obligation by reinvesting in other investment property.  Take an hour with your tax guy and your questions will be resolved.
  • September 17 2014
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It is obvious you do not understand tax rules for rental properties.  You need to consult a tax professional.  Capital gains are only owed on the difference between your tax basis and the selling price.  There are several factors that play in to calculating your tax basis.
  • July 18 2014
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Profile picture for Trinidad.Gaeta
I would consult your accountant before making the decision to sell which is of course when capital gains comes into play. Another thing to consider would be re-investing the proceeds and rolling them over into another investment property via a 1031 exchange to avoid the gains, unless you are just looking to cash out. 
  • July 18 2014
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Profile picture for blue screen exile
You don't have capital gains until you sell.  And the amount of equity doesn't give you any clue regarding the capital gains, only the selling price minus the cost bases, minus improvements does.

If in doubt, call 1(800)tax-1040, or go to irs.gov and do a search for the relevant publication, down load it, and read it.
  • July 17 2014
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