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re: Sold house/tax question
Posted on 6/15/23 at 10:40 am to Drizzt
Posted on 6/15/23 at 10:40 am to Drizzt
quote:
Sold for $232k. So minus $155k leaves $77k as basis.
Is $232K expected net of sales price?
You purchased it for $155K, but if you have been renting it out since 2027, you have taken depreciation which reduces your basis.
Rough math... 80% of 155K (20% allocated to land which we don't depreciate) is 124K, divided by 27.5 is approx 4,500 of depreciation per year. 6 years = $27K, so that drops your basis down to 155-27 = $128K
Compared to $232K selling price, that gives you $104K in gain... of which $27K will be taxed as ordinary income uo to a 25% rate, and the balance of the gain will be taxed as capital gain income. Depeneding on where the house is located, state taxes may apply as well.
You can do a 1031 but it has to be in process before closing, because the closing proceds must be escrowed.
Posted on 6/15/23 at 4:32 pm to LSUFanHouston
Thanks. I think my CPA didn’t take depreciation the last 2 years for this purpose but I’ll check now that you bring this up. I have a 1031 lined up with a real estate syndicate I’ve invested in before. Seems like it might be worth it.
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