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Taxes On Sale |
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Edith: My husband and I bought a three-family 30 years ago and lived in the main apartment for five years. Then we rented the entire property. It is paid for. We are thinking about selling it. It has appreciated a great deal, plus we depreciated the property and major expenditures over the years. How do we figure the tax that will be due upon the sale?—B. and J. T., Brockport |
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The fact that you lived there yourselves won't have anything to do with the calculations -- it's too far back.
To find your taxable gain, subtract cost basis from your sale price. Your cost basis is original purchase price, minus depreciation you claimed or could have claimed as expense over the years, plus anything spent on permanent improvements not already depreciated on past returns. Subtract also the legal costs of buying and selling, points paid on mortgages, and real estate commissions.
The portion of your taxable gain attributable to past depreciation is taxed at 25 percent federal, the remainder as a long-term gain at no more than 15 percent. State taxes are lower.
Your own tax professional can give you more specific information
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Edith
Originally published on April 6, 2006 |
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