Calculating Capital Gains Taxes

This piece came to us from Leonard Spoto at Asset Exchange Company. We thought it was clear and helpful so here it is.

Many property owners are familiar with the “Terrible T’s” in real estate: termites, tenants and trash. Often the “Terrible T’s” become so burdensome that investors decide they want out of real estate altogether. At that point however, investors become all too familiar with another “Terrible T” – Taxes! In the state of California, property owners who decide to sell an investment property are subject to the following taxes on gain:

• 15% Federal Capital Gains Tax
• 9.3% State of California Tax
• 25% Federal Depreciation Recapture Tax

Calculating the tax bill upon the sale of a property isn’t as hard as one might think, but it does require that you have a firm understanding of how much gain is in the property. Click the link to get started. http://www.ax1031.com/resources/calculating-gain.php

To defer the capital gains tax liabilities investors have the option of conducting a 1031 Exchange. For more information regarding the 1031 Exchange process, please call 877-471-1031 or visit www.ax1031.com. You can also call us.

Please be advised that this document is not a substitute for professional tax or legal advise. Asset Exchange Company and Barbara and Cindy, strongly advise all clients to consult their tax or legal advisors.