How to Calculate Taxable Gain from Selling a Rental [Tax Smart Daily 020]

Thinking of selling your rental property? Here's a quick tutorial on how to compute the tax consequences that you will face when selling your rental real estate.
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[@jamesrguglielmo9204]

Thanks for this great information.

[@Ella_kitty]

"most people the first time that they do something like this they go my gains fifty thousand dollars..." flash back to my accounting class when the professor raised the same question 😂 I love how you demonstrated this with an example. Super easy to follow thru. I've been watching this series to refresh my knowledge of taxation and it's a really fun way to learn/review

[@TheRealEstateCPA]

Thanks for the kind words :)

[@mcbeezee2120]

I completely suck at numbers, that is why I have a tax guy who is well-versed in the real estate tax arena.

[@matthewgigantelli7334]

Great video as always

[@chrisvandiver1431]

Thanks for the video! If you have unallowed passive losses carried over from prior years, could they be used to offset the depreciation recapture or capital gains?

[@kavithasundaram5045]

Hi, Thanks for the video. Can I reinvest the capital gain from the rental property to my primary residence loan that recently purchased?

[@paulewart2782]

I have some expenses related to maintenance that are partially depreciated, a roof, furnace ect. Is the depreciation from those items also included in determining step one net basis? Also, what happens to the remaining balance of those items that have not been depreciated? Where do I claim the balance on the roof for example.

[@EddieFreedom]

Fantastic video! Question: if the seller has losses carried over from the previous year or current year from being a LP in a syndication, will the losses off-set the $14,115, assuming there is at least $14,115 of K1 losses? Thanks!

[@imtiaziqbal3041]

Thank you You have explained this very well. Is there any way to know the accumulated depreciation as of current date based on the tax filing?

[@Maryam-ue3vw]

Many Thanks. I followed your calculation with mine. The last piece where you talked about tax on recapture and tax on capital gain was super helpful. I had. missed that. The tax rate ( unrecaptured section 1250) may be zero for income less that $41,675. Is that correct?

[@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.

[@gustavouceda]

Great info. I had 2 questions, First, why did you deduct from your 100k rental dep of 16k twice, from the adj. Basis and later from the gain of 58.5. Second, i sold a rental with over 25 years depreciation, that virtually offset my basis. Do I have any advantages to reduce tx on 100k by been old, over 70, and with incomes less than 60k? Thanks

[@MrT6bill]

What is cost basis if property was originally inherited? Last yearthey sold the inherited property but the proceeds were split among 4 decendents. Only 2 of them have been claiming depreciation on the property.

[@lizfindley122]

I’d like to lay this out and have you to tell me where I stand with it if I sell. Initially, my mom had a wheel that said her home would go to me and my brother. My brother needed some financial help, so I told him I would buy his half for $40,000. My mom then put the house entirely in my name as she continued to live in it until she passed so, technically it has been in my name for the past seven years. She died two years ago and of course paid no rent. So, is this inherited property, as the will initially implied, it would be mine and my brothers. Or is it gifted property since she put it in my name before she passed only because I was willing to help my brother out financially. Again, I paid him 40,000 and the house was entirely placed in my name. so, is this a gifted house or is it an inherited house also, the land that she built the house on was given to her by me and my husband.

[@magdaguzman2073]

I lived in my rental property for 17 years. I rented it 2 years ago, and i know i have one more year grace to sell it without paying taxes. My question is, if I sell it after that period, I will need to add to the cost basis only the depreciation for the years I rented it, right? In this case, it would just be a 3+ year depreciation. Am I right?

[@MRLINGERAYE]

When we're doing the sale of the property which form are we using

[@brendensong8000]

Fantastic video! Learned a lot! Your examples make everything so clear!!! it helped me with my pending decision for my rental!

[@TheRealEstateCPA]

Awesome, are you selling it?

[@Outstandinginmyfiel1]

The IRS bracket for capital gains is 0% up to $89,250 and 15% anything over up to approx $250k. However to calculate this you use your capital gains and your 1040 income to determine if you are over or under the threshold. My question is this... if you have income of say $50k and capital gains of say $70k giving you a combined number of $120k which is over the $89,250 threshold. Does that mean you pay the 15% on the entire $70k or on $30,750 which is the amount of capital gains which is over the $89,250 threshold?

[@ErinLAnderson]

Good question.

[@mertokutan1361]

thanks for the video. why is your sale cost only 5%? what is included in it? I was expecting it to add up to around ~10% ( agent commissions, closing costs etc.)

[@mikemay8334]

Hello Brandon, my question is regarding capital gains tax from selling a rental and I am retired over 65yr and on SSecurity. My annual income is less than the $70k and I have been told by friends that I am not responsible for paying capital gain taxes if I am in that situation. Do you know if there is a way I should file to take advantage of that? And are you aware of that benefit?

[@jrotor8]

Thanks so much for the video, quick Q, 14K tax+7.5K selling cost is about 21.5K. Percent that by 50K then tax is about 43 % ? Shouldn't the depreciation of the building(16K) be subtracted from the sales price ?

[@randypower9317]

I'm trying to figure it out on my own and I'm NOT an accountant. I owned a condo rental for 5 years and depreciated the appliances each year. I'm selling now. Do I still use your method in the video or something different? Are the appliance depreciated over 27 years to get a yearly average? Stumped!

[@zotac1170]

QQ: is depreciation deducted from a full price or with full minus land? In this case should it not be 90k - 16k?

[@capegoat1]

Hello Brandon... when speaking of selling Rental Property, is the handling of things the same when you're speaking of Rental Property used in a Trade or Business (i.e. client is in the business of renting properties and thus uses a Sched C, etc) and a Rental Property held by a taxpayer who uses a schedule E to report his her earnings (i.,e. NOT in the Trade or Business)

[@lseh4720]

It would help you’d write in words next to some of the important numbers, so we can hold on to what the numbers refer to. Thanks.

[@christopherstafford236]

what about improved property? can i deduct for my improvement expenses over the time i owned the home?

[@tamotsunishida6360]

How is the depreciation and expenses affecting to the property sale tax when I had a refinance ?

[@lokeshkedia9119]

Hi Brandon, i have a question on rental real estate. can we connect

[@douglasreed2584]

Brandon, This was an excellent video, providing in-depth explanation while easy to understand. Thank you for sharing. I do have a follow-on question. I am planning on some updates to fix some structural issues of a long-term rental single-family dwelling prior to sale. Would this be subtracted here in the capital gains? I would assume it would be added to other selling costs (5% in your example) to determine initial "net of selling costs"?

[@TheRealEstateCPA]

Yes when you perform rehab work, it's capitalized to the basis and reduces the gain as a result.

[@LuxiMeng]

in which part do you subtract your mortgage payoff?

[@q6realestateassociates802]

great video. The example didn't mention anything about loan balance and/or rehab costs that would affect your adjusted gains on purchase. How do you account or factor in those two pieces into figuring out the adjusted (taxable gains)? Thanks!

[@TheRealEstateCPA]

Those costs should be capitalized on your balance sheet and would reduce your total gain as a result of a higher basis.

[@brucechirico1971]

I have a property I have built new back in 1988, I have no records of what it actually cost. Have been depreciating it for years since new, would that information be on my tax returns?, Would love to run the numbers on what taxes in net would be to sell it, I think the values around 450k. I'm think it would be a good time to sell my rentals before the market drops

[@andypham9251]

What if the depreciation amount (straight line 27.5 years) is more than the cost of purchasing a condo 33 years ago with the cost of $82,000 ? thanks

[@darshanirajapakse4618]

Great video! Is section 1250 depreciation recapture where straight line method was used for rental property, always 25 percent or does it depend on income bracket.

[@TheRealEstateCPA]

Unrecaptured 1250 gain is the straight-line building depreciation. Top rate is 25% and scales based on the capital gain rate table.

[@danielsnook5029]

What about improvements I make just prior to sale? Obviously they aren't reflected in depreciation.

[@bibekshrestha527]

Where do you put the colossal amount of money you pay for realtor (broker) to see your property?

[@TheRealEstateCPA]

To calculate the capital gain or loss from the sale of a property, you generally subtract the property's cost basis from the selling price. The cost basis is essentially what you spent to acquire and improve the property, plus certain costs associated with selling the property, including realtor commissions.

[@bibekshrestha527]

@@TheRealEstateCPA clear! Thanks!

[@murkri8723]

Several questions: 1. What if this was my primary home first and I stayed in it for more than 2 year, say 6? 2. I then move out for 15 years, rent it out, and then sell it? 3. After 15 years, I move back into this property making it my primary home and then sell it? What will be the tax calculations be like? Many thanks.

[@lola-mo5sh]

my accountant told me if u live in it for 2y u pay nothing w max capital gain of 250k/ single or 500k/couple

[@CHUONGHO-os9xc]

What if you do a 1031 and the property that you replace is only 40% of the price of the sale of yor properties?

[@Maxippouce]

You can't. Wth A 1031, the new property value has to be higher than the one you are selling

[@beadguru99]

What valuation should i use to calculate depreciation? Is it the tax assessors?

[@TheRealEstateCPA]

Cost basis

[@CS-jk5gx]

Hello, what is your total depreciation is greater than your net gain? for example total depreciation 100K, and total net gain 80K. Then do you pay 25% recapture on 100K + LT cap gain on the 80K?

[@ErinLAnderson]

Following

[@duneme]

Currently, aren’t you allowed to exclude about $90,000 of Gains? I believe currently you wouldn’t have any gains taxes wise!

[@mcuthrell]

I know you were keeping things simple, but capital improvements and some buying costs increase your cost basis, correct?

[@TheRealEstateCPA]

Yes indeed!

[@jimmyodonnell9208]

Where did you come up with $27.5 years for depraciation on a property that you own for 5 years??????

[@billallen1307]

Life of the property. Assumes the value will be zero in 27.5 years. There are different ways to do depreciation though. I used 20 year straight line. I was hoping he would cover capital gains when income is low or zero.

[@teresab208]

Selling 1 this year. I dread the taxes. It seems like you're penalized.

[@nidasalvador9705]

Am sorry about that they give me 79 .00 I I make copy n return to theme am inocent