Skip to main content


Showing posts from September, 2014

What Will Your Taxes Be On The Sale Of Your Rental Properties?

The idea for many with rental properties is to have a stream of income now and assets to sell when you retire. Many investors are not aware of what the tax consequences will be when they sell the properties and this concerns me because they are likely in for a big surprise.
Capital Gains There are a couple of components of income taxes when you sell a rental property. Assuming you cannot exclude the gain (have not owned and lived in the property sold as your main home for at least 2 of the last 5 years), then you will be looking at both Capital Gains Tax and Ordinary Income Tax on the sale of the property. The Capital Gains Tax generally is on what you sell the property for less the cost of the sale and less your adjusted basis in the property.

Generally your basis is your cost of acquiring or building the home that you have not deducted previously on your tax returns. You may have additions or reductions of basis for various things which are detailed in IRS publication 523 Selling …