Rental Sale


M

Michelle Kapp

Selling Rental Property and want to plan for taxes. Sale
was for approximately 100,000. Cost was originally 50,000
including capital improvements. Depreciation has been
straight line to the tune of 15,000+-. It would appear the
gain will be around 65,000 and I should keep 15% for capital
gains tax. Am I on the right track basically?
 
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A

Arthur L. Rubin

Michelle said:
Selling Rental Property and want to plan for taxes. Sale
was for approximately 100,000. Cost was originally 50,000
including capital improvements. Depreciation has been
straight line to the tune of 15,000+-. It would appear the
gain will be around 65,000 and I should keep 15% for capital
gains tax. Am I on the right track basically?
Not quite. The $15,000 is "unrecaptured section 1250 gain",
and is subject to a tax rate of no more than 25%. So the
amount to set aside is $15,000 x 25% + $50,000 x 15%, or
$11,250.
 

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