How Much Tax I Paid When I Sold a Rental Property

[@CoachChadCarson]

Here's the free spreadsheet from the video: www.coachcarson.com/sellrentalpropertytax/ Enjoy!

[@tinacoladda8006]

WOW! This should be used as an example how a CPA should explain taxes to his clients. You've done a fantastic job, you seriously have a teaching talent. I haven't found another person on youtube even closely as good in explaining this subject. Thank you!

[@CoachChadCarson]

thank you so much! That's a big compliment. I appreciate you watching and I'm glad it was helpful!

[@mariabalderas5785]

Thank you so much for your video, it is really helpful, can you share your free spreadsheet, please.

[@santiagoescalambre4738]

Agree

[@sattirbitti1550]

@@CoachChadCarson Any video on how Passive active losses be used at the time of sale of the property? is it used to reduce the taxable gain on sale?

[@CoachChadCarson]

@@mariabalderas5785 here it is: www.coachcarson.com/sellrentalpropertytax/ Enjoy!

[@briand4000]

Bottom line, you get RAPED by the IRS when you liquidate rentals. It is absolutely horrible. You take all the risk, do the work, deal with renters, for years on end then when you get tired of it and just want to retire, the feds hammer you. We're getting ready to sell a highly appreciated duplex in a couple of years and the tax bill will be breathtaking...and infuriating. Well-presented information, albeit sobering in scope!

[@priceandpride]

i'm sure you enjoyed the nice roads and public services all that time as well

[@olympicblackpowderrifles3155]

​@priceandpride someone obviously has the concept of the risk and hardworking that goes into managing a rental. You must have nothing

[@mjaldrich7]

Thank you for this important video. Wish I had seen in 10 years ago before I sold my rental property..If I had known what I'd have to pay in taxes I would had never sold it. Not being informed about taxes can be a painful lesson.

[@sargonoshana2324]

Exactly my situation as well, sold my 4 unit 5 years ago. Now i realize you just don't sell investment property.

[@rhondazh]

I was searching KZbin for videos to help me better understand the tax implications of selling a rental property we’ve owned for 25 years! Excellent content and appreciate the real life examples using personal income tax rates. New subscriber!

[@CoachChadCarson]

thank you for watching and the comment!

[@TZach1987]

Basically the government givETH (depreciation) and then takETH (depreciation recapture) when you sell the property. Why not come up with a better system to help people that own one or two rental properties? These byzantine rules REALLY make the taxes overly complicated unless you have a good tax accountant on hand

[@m2gautam]

I used TurboTax and it guided me through this complex calculation.

[@torrencead82]

You read my mind Coach! I've been considering selling my rental property within the next year. I knew I needed to run the numbers, but I had no clue how to start. Thank you for such an easy-to-follow video on how to figure this out. The way you teach is exactly why I follow you. I appreciate your content.

[@CoachChadCarson]

Thank you Ashley! Glad it was helpful, and I hope the spreadsheet will be useful for you on your rentals.

[@leighannebrown-pedersen7536]

I got crushed by a rental during COVID and sold it in 2022. I wish I saw this earlier this year. I calculated pre-payment of taxes based on long term capital gains calculators and I had never heard of depreciation recapture before. I owe so much this year it actually makes me ill. If I saw this earlier, at least I would have known. Thank you so much for the breakdown of information.

[@CoachChadCarson]

I'm sorry you got surprised by the extra tax. It is unwelcome news for sure. I hope this video will help others avoid what you had to deal with.

[@fivestar000]

Would you have kept it and not sold it

[@leighannebrown-pedersen7536]

@@fivestar000 current market trends see little property owners getting out and corporate conglomerates coming in. Taxes are done and I still made a little. Albeit less than expected. It’s a cautionary tale for small time investors. If you can’t do a 1031 exchange, then be ready.

[@ButchWhitehouse]

Enjoyed the video and the explanation. It's also worth noting that even if you don't claim depreciation you will still owe the tax(IRS Rules) and if your income (including your capitol gain) puts you over a certain amount there is another tax called net investment tax that will take another 3.8% of your gain. Income tax, capitol gain, depreciation recapture, net investment tax....word's I wish were not in my vocabulary.

[@CoachChadCarson]

yes! very important point. I've heard people say "I just won't take the depreciation. Then I won't have to recapture it." Wrong! IRS will get you on that.

[@robhemmerle643]

As a finance/spreadsheet junkie, this was a perfect video. I had heard a lot of people mention the depreciation recapture but this was the most in depth video I’ve seen on it’s impact. Thanks for walking through it in so much detail!

[@CoachChadCarson]

It's the finance/spreadsheet junkie club!! Glad it was helpful, Rob. I had noticed that there aren't many explanations out there so I hope this will fill the void.

[@robhemmerle643]

@@CoachChadCarson if you do the 1031 exchange and buy another property, how do you recapture the depreciation on the next property? Do you have to keep track of multiple properties worth of depreciation so once you finally sell it all that you can track it all the way back?

[@CoachChadCarson]

Good question. With a 1031 exchange you move your basis from the old property to the new/exchanged property (including any depreciation). Then any depreciation on the new property just gets added to that.

[@tweetybird7668]

Wow, great tutorial. I'm using TurboTax and I didn't want to believe my taxes owed, so I found your video for the detailed explanation. I only have 1 (3br) apartment that I bought in 2007 to have my 3 daughters (ea 3 yrs apart) and 2 of their friends lease the house. I just sold it 12/31/22 (15yrs) and I didn't realize how the recapture depreciation plays a huge part in taking much of my capital gains away after all of those headaches I had to put up with from the tenants calling me saying the toilet is overflowing, fixing broken doors, windows, cutting grass, plus all the sweat equity and $$ it cost me to fix it up to be one of the nicest houses on the street. I'm disappointed of the tax I had to pay, so much that I was about to get with a tax accountant thinking I'm doing something wrong. Thanks Coach, this is the best explanation on KZbin.

[@CoachChadCarson]

glad it helped! Yeah, this whole transaction can be mysterious to a lot of us. But once you run the numbers and understand the different pieces it makes sense (even though the tax bill isn't fun!! Agree on that!). Best of luck with your property.

[@HighCountryRambler]

I just sold a rental home to my son, and gifted half the value to him. Paid $115k 20 years ago, valued at $350k when I sold it to him for $200k. I owned it free and clear and put about $8k in upgrades over 20 yrs. I just stroked a check to the state and IRS for $32k combined based on my CPA's results. I'm looking forward to plugging my numbers into your spread sheet to check his work. *Worth noting* - The IRS allows me to break up the payments into 6 payments into next year , so the money I set aside for taxes from the sale, I put it into a money market fund returning +-5%. Its about the only positive outcome from this shellacking. Tks for the video.

[@CoachChadCarson]

Thanks for sharing your story. Yes, it can be a shock to see the tax bill - even in a situation like yours where you sold it at a lower price to a family member. Hopefully it will be a good rental property for your son.

[@seanmckay9194]

Very timely as we are looking to sell a few rentals. Phenomenal breakdown! You are right, there is very little content on this topic and you did a great job breaking it all down in a thorough manner. Thanks so much for the info Coach!

[@CoachChadCarson]

Appreciate the feedback Sean!

[@12reachpenny]

THIS is exactly why I have admired you since the day I met you! BRAVO Coach!

[@CoachChadCarson]

Awww. Thanks old friend. I appreciate you saying that Penny. Good to hear from you.

[@TheEvanDanteShow]

Best real estate channel on KZbin for education!

[@CoachChadCarson]

I really appreciate that feedback! Makes the work on the videos worthwhile;)

[@stephanieryder3633]

You are a true Mentor! Thank you for ALWAYS sharing youe knowledge. I appreciate you.

[@CoachChadCarson]

My pleasure! Thank you for the awesome feedback, Stephanie. I appreciate you (and others who benefit from the videos).

[@Actrogy1]

Hi Coach, do you have a video on how to transfer property from primary resident into an LLC? Is it a good idea to transfer a property from primary resident into an LLC after a more than 2 years primary resident if I want to rent that property? Any tax benefit for an LLC vs individual?

[@mjaldrich7]

I would personally like to see a video regarding the book keeping/management of receipts and expenses for tax purposes. You might have to bring in your CPA to speak to these topics obviously but I know I'm not the only landlord whom has some questions about this. Thank you sir

[@CoachChadCarson]

Thanks for the feedback. I agree that'd be a fantastic topic. I already have some ideas, and I've put them on my content list for future videos.

[@KevinOst]

Well done coach. Thanks for taking the time to fully explain this topic in layman’s terms!

[@getinthespace7715]

I'm moving to an area with a huge short-term rental market. Of the 4k population, there are over 1k short-term rentals. Drives property values way up. I'm saving to buy property and build my own house this summer. I can put $250k into a lot, permits, property improvements, and home construction materials and build a house worth over $600k-750k. Sell one every 2 years as my primary residence and make a bunch of profit. Alternatively, I could build smaller, cheaper places and build a bunch of rentals. Due to the high property values and property taxes, double on anything that isn't your primary residence. The math works out better for building living in and selling under section 121 exemption vs. building, holding, and renting. Elevated property taxes would eat up too much of the rental income, and you lose the tax benefit after the 5 year window.

[@wilsoneashoian5789]

Then take that $4K divide it by numbers of hours you worked to keep that rental. Let's say 500 hours in 13 years. $4,000/500= $8 per hour plus the stress.

[@nicolauschrist3135]

Coach, what are the tax forms needed to report the "gains", "depreciation recapture" and the "tax" that will be owed for each? it seems there should be additional forms need then just Schedule D and form 8949? I used your formulas, which is a great asset thanks for making it available, but having trouble plugging the numbers into the IRS forms? can you help me out?

[@profusionlifetv7183]

Great video but I must say the amount of money we pay in taxes is outrageous.

[@obie1coby]

Wow I see why the 1031 is so useful. Imagine if you had done a cost segregation, you would've owed more than your check

[@carlossiuv9701]

Thanks for the example. The only problem that I found was how to calculate the depreciation, really I do not understand how you got $36,500. Maybe my problem began when you use $150,000 as example. Maybe you can explain one more time how do you calculate the depreciation. thanks again.

[@ROG956]

I didn’t understand that either. Was 36, 500 the total depreciation claimed after 13 years? Does depreciation increase yearly as home appraised value increases or is it fixed from purchase price?

[@mdeliam39]

Thank you so much for your video and the very helpful spreadsheet. I'm looking for the "companion video" mentioned in the spreadsheet to understand what my ordinary income tax rate is. If you get a chance, could you paste a link to that video. Again, thank you for this and your other videos!

[@DTM45]

Screw this. When it is time to sell a property, move into it and make it your primary residence for two years. Then, zero tax.

[@CoachChadCarson]

I wish it worked like that. But there is a proration of taxes still based on how long you live there. Tax doesn't go away after 2 years moving back in.

[@stevenmflores]

Basically Taxes freaking suck

[@alexbryan87]

Good video thanks for the info. Just some feedback though that the music in the background is super annoying. There were several spots in the video where I had to rewind and listen twice because the music was so distracting.

[@CoachChadCarson]

thanks for the feedback, Alex.

[@marcietorrence5361]

If a 68 year old sells a vacation house, never rented it out, what is the percentage on the capital gains? How much depreciation is allowed?

[@CeciliaMarieAngela]

I was hoping one of these videos would get more in the weeds on what closing costs can be included and what can be considered an improvement and what can't.

[@TheZambranoj45]

I am presently doing my taxes and sold a rental property. So I'm hoping to follow your instructions on doing my tax return.

[@CoachChadCarson]

good luck! hopefully the free spreadsheet will help you as well.

[@Jarnagua]

Sub. Clearest explanation about recapture and capital gains on the net. Thank you.

[@CoachChadCarson]

Glad it was helpful! Thanks for the feedback and the sub.

[@Fedgery007]

You did an excellent job explaining this!

[@lisarechsteiner2618]

Hey Coach, the spreadsheet looks dope! Is yours done in Quick books? Im interested in using your cpa or tax person. I didn’t see their info in comments or show notes

[@jodag3475]

He said the effective tax rate was 21%... but if his profit was 10k and taxes were 6k.. wouldnt that be 60%? Or is profit from rent payments through out the years factor in?

[@sargonoshana2324]

This video is too late for me, sold my building paid a lot in taxes five years ago. But i think if i watched it, i wouldn't believe it. But if i did believe it, i wouldn't sell my property. Good video.

[@CoachChadCarson]

Selling real estate you've held for a while can mean a big tax hit. No doubt. It's why most people hold or do a 1031 exchange. Thanks for sharing your story.

[@johngerald3102]

can you do a similar video showing the example of selling rental houses using passive losses

[@bradmartin4253]

Hey Carson, thank you so much for this awesome content. You do a really great job of explaining and using visual aids. Got a question for you. I'm thinking about buying a house that will be my primary residence and then renting out the downstairs out as a short term rental. It looks like I have to take depreciation - based on the percentage of area compared with the total square feet of the entire house. Let's assume I rent out 15% of my house for 10 years while I live in the other 85% as my primary residence. Then after 10 years, I sell the house. Do I have to recapture all the deprecation I've taken over the 10 years on that 15% of my house that I had rented out? If so, do you think I could get out of the recapture by taking the downstairs off the rental market for the last two years before I sell? The assumption is I would be living in 100% of the house full time for over two years before I sell.

[@xayxanayang222]

Awesome. Thanks for taking the time to do the videos.

[@CoachChadCarson]

Glad you like them! My pleasure.

[@Insta_trixocity]

Thank you for sharing this brother man. You have certainly earned a new subscriber, respectfully!

[@deborahheard2191]

My income is not taxable 78,00 annually, wonder what Brackett ide fit in? Also please, on the next purchase through this process will the irs want money later...say 4-5 years later??

[@MWTH37]

Does the Depreciation still apply if you live in the property for over 2 years and thanks for the content and spread sheet

[@jonhollingsworth6984]

Great job as usual coach!

[@a.s.america]

this is a great video i saved it as a great example thank you sir

[@BubblesBath]

Gosh my father and I have paid 60,000 in taxes.we sold 3 rental properties.I sold 4 th property and probably owe another 20;000 in 2023. My husband and file together.I did not make a gain with fourth property.how do I reduce what I owe …I understand the recapture depreciation.any advice to reduce .I did do some renovation .I had to repair and replace carpet and paint .I paid 12;000 in repairs and getting property ready to sell.

[@scottwhitley2242]

My man! Thank you for the 411!

[@PartyTimeProDJs]

Is there an error in this video? You calculated the ACB at 62,000. But when you calculated the ATG you entered 62,500 as the ACB?

[@mikedundon1217]

Excellent video. I may be selling a few properties soon. This was a great overview- thanks Chad!

[@CoachChadCarson]

Thanks Mike. It's definitely better to plan this stuff before you sell! Let's you consider your options.

[@leonornoel3743]

Thank you very much I it is very much great explanation. This is what I need right now

[@whatsitlike6392]

If you add in all the repairs you did do you think you lost overall? I think the rentals I have I've only made money on appreciation. If I subtract repairs from rent it's probably break even or slightly ahead. Seems like once you do a roof all profit is gone.

[@CeciliaMarieAngela]

Do you have any videos showing how to take the carryover schedule E rental losses against the capital gains of the sale of the rental property? My software continued to show an unallowed loss.

[@kkutube1972]

I just take due to seller times 15% and save that for tax. Sold 3 homes so hopefully, I have saved enough.

[@lagansam6226]

Great video as always coach, keep going for us who are interested in big stuff!

[@CoachChadCarson]

Thanks! Will do!

[@ednasalinas8280]

Your explanation is GREAT, not much like this on YT. Definitely will Subscribe. I have a rental property under my single member LLC. To take advantage of the primary residence capital gains exclusion, I plan to move back to this property for 2+ years and then sell. Do I have to change the ownership in the deed from LLC to my name in order to count the 2 of 5 years of primary residence?

[@sharonpichai6655]

Great video! Planning to rewatch!

[@CoachChadCarson]

Thank you Sharon!

[@quarterspringfarm5671]

Thanks for the info, coach! Helpful as always. Thanks for taking the time to educate and help.

[@CoachChadCarson]

You bet! I appreciate the feedback. And thanks for watching.

[@julhe8743]

Great video 🙏 my question is if I rent a property for 7 years and later I Mede this rental property my primary residence for 2 years. If a sell the property after 2 years I have to pay the recapture taxes for the 7 years? 🙏🙏

[@303Estates]

Great video!!! question... on your spreadsheet, "total depreciation" ... do you add up all the depreciation write-offs over the years since you purchased it... Thanks!

[@CoachChadCarson]

yes, that's correct! My CPA tracks our depreciation and records it as an expense each year on our tax return. So, that's where I get the number in my case.

[@YankeeDoodleDandy]

A lot of people clearly don't take into consideration time value of money when they do their analysis.

[@Zest4life890]

I bought my house for $162,500, say if I sell it for $220,000, I owe $158,000 because I had a modified loan, I paid less on my mortgage, my property is in Ct.

[@DSLACA]

Thanks for the video I'm liking and subscribing!

[@CoachChadCarson]

Thanks for the sub!🙏

[@jenniferressmannwriter]

Thanks for this helpful info 👍

[@lilyeos5214]

What if I turn rental property to personal use? How does tax work when it comes selling

[@brendaalexander2991]

great video. I have a property that i purchased 18 years ago on a 1031 tax exchange,. I am looking to sell that property now. what basis do I start with to determine the capital gain .

[@bestaff]

Very thorough. So what would you consider good? If you had a 10k net after taxes as opposed to the 3k?

[@NazarethSavage84]

So in this particular example understanding YOUR personal situation,out of the 18k& 10k (1/2 of the 36k for depreciation & 1/2 of capital gain) , you only had to pay “back” 4k?

[@hdtwal1den]

Great video. Very, very helpful.

[@marjuhrene]

Great video. Why not 1031 into another (bigger) property to defer the tax bill?

[@CoachChadCarson]

In this case 1031 wasn't worth the time and expense for us. With much bigger profits, however, we would likely do that.

[@sargonoshana2324]

Too many rules, i paid $700 for 1031, i had to select up to 3 properties in 45 days and close on those selected up to 3 properties before 6 months. I made the selection easy, but couldn't close on them.

[@taurus1379]

And why the land is not subtracted from the home purchase price in all your calculations? Land does not depreciate

[@kimturner1070]

Love the bucket illustration!

[@CoachChadCarson]

thank you!

[@aleclatulippe]

Super informative video!!!! Thank you!

[@natusfreedom472]

How do u , defer the taxes .. 1031 exchange , maybe show a example , of how it’s done ✅ Thx

[@woodrowwildcat3286]

When a property is sold for strictly land value, does this change the calculations? I sold mine and they are being torn down, several already demolished. Thank you.

[@theodorebekiarides5013]

GREAT SHOW

[@billl3936]

What percentage of rental income do you set aside for repairs? How do you handle big items like roof replacement or HVAC replacement?

[@CoachChadCarson]

Historically, repairs and capex (big roof and HVAC type repairs) have been 10% to 20% of my rent. But as for budgeting, I typically start by setting aside a reserve of $5k/property just as a rainy day type fund. As I grew I switched from $5k/property to about 3-6 months of expenses for all the rentals (ex: $20,000/mo expenses = $60k in reserve). Once those reserves are set up, I don't set anything else aside unless I deplete that fund. So, if I can pay for all repairs out of the rents that month I will. If not, I'll dip into the reserve and then replenish it with cash flow in future months until it gets back to that level. I'm sure there are different or better ways to do it, but that works for me.

[@richvillacres2793]

Thanks Coach. So, if I make too much to do a standard yearly deduction for depreciation I have to deduct it passively when I sell it correct? I can’t use it as a deduction against my annual ordinary income right? Thanks so much and love your channel!

[@CoachChadCarson]

That's correct. Those excess losses you can't use now carry forward to when you sell and can offset taxes owed then.

[@ravick4u]

Great video. I would like to ask about depreciation, do I have to take the depreciation when I file my taxes? What if I do not take depreciation?

[@CoachChadCarson]

thanks for watching. My understanding (as a non CPA!) is that you don't HAVE to claim it on your tax return. But when you go to sell the property, you WILL have to pay depreciation recapture tax AS IF you claimed depreciation earlier. So, you'd be crazy not to claim depreciation now and at least get some tax savings on the front end since you'll have to pay later (unless you do 1031 exchanges or die. Only ways I know to avoid it!)

[@ravick4u]

@@CoachChadCarson thanks a lot for explanation. Do you have a video on 1031?

[@jldsystemsltd]

I have gone to the link for the spreadsheet and never received the the email wth download?

[@victoramor]

i sold a rental property sept of 2024 where i estimate i will pay like $70K. when i do my filing on April 2025, will i be charged with penalty for not paying the taxes out right when i received the proceeds of the sale on sept of 2024. if i will be penalized i want to pay now so i can avoid the penalty. i would appreciate anyone's comment.

[@lvteachme973]

As always,, great lesson from a great teacher. Thanks Coach!

[@CoachChadCarson]

Thank you for watching!

[@lvteachme973]

I am signing up for your course next cycle. Please keep me informed of the date via email. Thank you.

[@CoachChadCarson]

@@lvteachme973 will do! The next course is actually coming up on 9/13. So stay tuned!

[@barryzeigler4502]

What about the cost of the land? Is that deducted from your basis somewhere??

[@seanwaters8886]

I would find it interesting, how much of the mortgage was paid down by your renters -- I would think that would be an additional gain, or perhaps it is not considered an additional gain? If renters were paying for 13 years, that would have paid down a significant amount toward the mortgage, no? (By the way, thank you for this lesson).

[@johnmcguire6443]

since you were buying and selling properties, couldn't you use a 1031 exchange?

[@waleedabdellatif9806]

Excellent advice !

[@CoachChadCarson]

Thanks for watching!

[@faithfulwordministries3449]

Thank you for taking the time to give us this spreadsheet. Beats napkins, haha.

[@uredskivid]

You are great ! Thanks for explaining all this .Now is there a soft ware program that help do this work ?

[@CoachChadCarson]

thanks Redd. I either use this spreadsheet that I have linked in the description or ask my CPA to help me do it.

[@metalrooves3651]

what if you had a short term and NEVERused depreciation,JUST PAID TAXES as you went?

[@lillithjones993]

That’s a good question

[@chrisleigh2238]

Hey Chad, thank you for the concise video! It really helped me understand taxes a little more in regards to rentals! I was curious, did your equation need to include fica taxes as well or are those not paid until a later date? Thank you!

[@CoachChadCarson]

Thanks for watching Chris! Rental income is not normally subject to FICA tax. As investment income it's categorized and taxed differently than your normal salary or self employment income would be.

[@chrisleighcreative]

Right on! Thank you for the info. I have heard “so longs you do not have your RE license, you do not need to pay FICA”

[@richvillacres2793]

Were you able to depreciate this property each year because you have real estate professional status? Also, would the depreciation recapture still occur if this property was purchased in a self directed 401k or Roth 401k?

[@CoachChadCarson]

You can depreciate the property whether or not you have professional status. But professional status allows you to USE excess losses if your rental expenses (including depreciation) exceed all of your passive income losses. That never was an issue for us. We used all of our depreciation to offset other rental income (you don't need to be a professional status to do that). But some people - like a high-earner with a salary job or a house flipper who makes $500k/year - it could be beneficial to use those excess losses to offset their active income. You can only do that if you're a real estate professional or have a spouse who is a real estate professional. I'm not sure about the self-directed IRA depreciation question. That'd be a good question for a real estate tax specialist like John Hyre: www.taxreductionlawyer.com/?r_done=1

[@mauricioramirez2813]

Great video! Thank you.

[@CoachChadCarson]

Thank you for watching!

[@tc3690]

Awesome video

[@JuanitaHernandez]

On what tax form do you put the capital gains and on what form the depreciation recapture?

[@jennifer750]

Could you send me the spreadsheet the link isn’t working for me? Thank you!!

[@dadmau5_338]

Does it make a difference for this scenario: bought property as main residence in 2005 moved out to keep as rental in 2012 (lived there for 7 years) selling it now in 2023 are capital gains, depreciation, etc. based on when you bought it or when you started it as an investment property?

[@JeromeMaushard]

when you started investing.

[@William14094]

What if you owned and lived in a property for 10 years, then rented it out the last two years, then sold it for a profit of $50,000. Wouldn't there be no tax?

[@CoachChadCarson]

The current rule is "2 out of the last 5 years" to get the exemption. So, in that case you'd probably be fine since you only rented it 2 years. You can read about it directly from IRS here: www.irs.gov/taxtopics/tc701

[@LordOfTheGreen]

You should never pay taxes in the realestate business between depreciation and 1031 exchange throw it in a trust creating a step up in basis for your kids all without paying taxes and building generational wealth.

[@bgliveshow]

Great video!! I was not aware of the depreciation recapture. Thank you for sharing! I’m still unclear on something and I can’t seem to find the answer to this anywhere. I’m closing on the sale of my rental property (condo) today. The Capital Gains taxable amount will be close to 80K. Aside from the 1031 exchange, which from what I understand has a 45 Day time limit to buy a new investment, what else can be done? I would eventually like to purchase a duplex, but not at the current prices. I also own an S-Corp. Should I pay off the mortgage on my home, which wouldn’t affect what I would still owe with capital gains. Any advice on how to deal with the whole Capital Gains issue would be greatly appreciated! Thanks!

[@CoachChadCarson]

1031 has 45 days to IDENTIFY a property (or properties) and 180 days to buy properties. And the best strategy, if possible, is line up and tie up a deal before you even sell your rental. Other than 1031 exchange you can owner finance to Defer some of gain. But yous till pay depreciation recapture. So not a lot of other options other than just pay the tax (which is historically still pretty low)

[@fivestar000]

So you defer taxes when doing the 1031 exchange even on a rental property? Or 1031 is for personal

[@zfxman02]

What if you bought a property as a primary home and converted it to a rental years later. Can I still include the closing costs I paid when I bought the home as part of my cost basis?

[@CoachChadCarson]

I believe yes, you can include that in the basis as long as you have documentation (like your settelment statement). But it's a good CPA question.

[@misspimake]

Helpful video, thank you. What happens if there is a capital loss? Would one still owe taxes on the sell of the rental property? In your situation, you say it wasn’t a good investment, but it also depends on how much you actually profited off the property, I would assume you paid down the loan quite a bit minus realtor/closing costs with having it for 13 years?

[@CoachChadCarson]

If you have a capital loss even after accounting for depreciation recapture, then no you wouldn't pay taxes. My deal wasn't best I have done. But it also wasn't bad. So you are right about that. We benefited from it

[@misspimake]

@@CoachChadCarson thank you! Would we still have to pay on the depreciation recapture regardless if there was a gain or loss? Also, we no longer have the closing documents when we bought our rental house 15 years ago. Can we give our CPA a ballpark number when we file our taxes?