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Original Purchase Price
Improvements
Depreciation
Sales Price
Transaction Costs
%
State Capital Gains Tax Rate
%
Federal Capital Gains Tax Rate
Only your tax preparer can give you an
EXACT CALCULATION on your savings.
All others will be estimates.
Taxes for Real Estate sales are paid on capital gain, not equity or profit, along with depreciation recapture. It is possible for a taxpayer to have little or no equity or profit upon sale and still owe significant tax amounts. To avoid paying any capital gain taxes in an exchange a taxpayer should attempt to:
Purchase replacement property equal or greater in net sale price of old relinquished property.
Reinvest all of the net equity in replacement property.
Obtain equal or greater debt on the replacement property or have a reduction in debt that is offset with additional cash at closing from the taxpayer.
