What will I be taxed on the sale of property?

FlyBoeing:

If you did not use theproperty as a primary residence, you cannot get the benefits of protecting the gain of up to $250,000.

You would get taxed on thecapital gain. However, be careful here. The IRS taxes the gain you realized on the sale at the capital gains tax rate. However, the gain you realized is not necessarily the difference between what you sold it for and what you paid for it. It is the difference between your tax basis and the amount you sold it for.

Your tax basis is the original price, plus allowable capital costs you incurred (i.e. money spent to replace a roof or make major structural replacements) minus the amount of allowed depreciation under the tax code (evenif you never actually took any depreciation).

As for how you report it and on what forms, that would depend upon whether you owned the builidng as a sole proprietorship or some corporate form.

Additionally, depending on how long you held the building and the circumstances, there could be recapture rules that apply.

This is really something that you should seek the advice of a good tax accountant on as it can be tricky and you want to make sure it is done right. You don’t want the IRS coming after you!

Hope this helps.

use a 1031 exchange and you can defer the taxes with another property