Tax info
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Tax info (by chris [CA]) Oct 5, 2015 3:29 PM
       Tax info (by Martin [CO]) Oct 5, 2015 5:42 PM
       Tax info (by Coplin [CA]) Oct 5, 2015 6:19 PM
       Tax info (by Robert J [CA]) Oct 5, 2015 10:06 PM

Tax info (by chris [CA]) Posted on: Oct 5, 2015 3:29 PM
Message:

State Specific Question About: CALIFORNIA (CA)

Hello! Let's say I sell a rental house for $265,000.00

Do I have to pay capital gains tax on the entire $265,000.00or just on the $265,000.00 minus the mortgage

When possible, please advise.

Thank you! --76.90.xxx.xx



Tax info (by Martin [CO]) Posted on: Oct 5, 2015 5:42 PM
Message:

Chris, you would pay taxes on the gain, or profit, that you make on the sale. For example:

Purchase the home for $260,000

You had deductible costs at time of purchase of $5,000

Over time, you have depreciated it $35,000 (or should have - the IRS doesn't care if you actually did or not. They calculate your taxes as if you did depreciate it)

Over time, you have put in improvements (not yet realized) worth $10,000.

According to the IRS, your basis is now $200,000.

You sold it for $265,000

You had deductible costs at closing of $5,000.

According to the IRS, your selling amount was $260,000.

So, you had a gain according to the IRS of $60,000. That is what you would pay taxes on. The amount of your mortgage does not factor into the profit amount.

This is a very complex issue, and it is really important that you get it right (the IRS frowns on "wrong"). I strongly suggest you get help from a professional with your taxes in the year you sell your property. I gave you a very high level look at it. There are pages and pages of details that you must get right.

Good luck. --174.29.xxx.xx



Tax info (by Coplin [CA]) Posted on: Oct 5, 2015 6:19 PM
Message:

I second Martin's advice. Get a really really good tax attorney to force you to get the correct information and do you're return correctly. Make sure the attorney specialized in taxes and if possible real estate taxes, because there is a ton of information now needed on the history of the rental to do a return.

I've been thru a sale and the documentation level of detail is equivalent to that needed to get a loan now a days. --104.34.xxx.xxx



Tax info (by Robert J [CA]) Posted on: Oct 5, 2015 10:06 PM
Message:

Real Estate is not just buying something right, fixing things on the cheep and selling for a profit! It's all about keeping as much as the proceeds as possible. Why? Depending on how much profit you made during the calendar year and who your tax advisers are -- this is what one looks forward too:

Federal Capital Gains Tax depending on long term or short term, up to 20%.

Your State Tax up to 13.3%.

Recapture of the depreciated amount, 25%.

Obama care tax, if you make over $200,000, another 3.8%.

So seeking a Real Estate TAX EXPERT or doing a 1031 Tax Deferred Exchange are two options -- there are others on this web site with lots of ideas and help... --173.55.xxx.xx



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