Sold house/tax question

Last lived there 2017. Have been renting since.

Sold for $232k. So minus $155k leaves $77k as basis.

Thanks for your help. I guess the question becomes is it worth doing a 1031 for taxes on $77k. Have to think about it.

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Sold for $232k. So minus $155k leaves $77k as basis.

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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.

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Haven’t closed yet

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You have to start the 1031 process pretty early. I’ve done it twice, and both times the 1031 paperwork had to be included in the sale agreement. It’s not something you just do after the fact.