Selling Rental Property

[a12vman]

What are the tax implications of selling a rental property that I have held
& rented for ~ 2 Years? I have tried to read some of the IRS Pubs relating
to recapture but the wording is, well, less than friendly.

If I am thinking about buying another property, would a 1031 Exchange make
sense in this case?

Thanks in Advance,
-a12vman

[Phil Marti]

"a12vman" <a12...@hotmail.com> wrote:

> What are the tax implications of selling a rental property that I have
> held & rented for ~ 2 Years? I have tried to read some of the IRS Pubs
> relating to recapture but the wording is, well, less than friendly.

Basically, you wind up with a capital gain or loss. Assuming it's a gain,
the part of it attributable to depreciation is taxed at one rate and the
rest of the gain at another rate. I highly recommend hiring a preparer for
that year.

> If I am thinking about buying another property, would a 1031 Exchange
> make sense in this case?

If you want to acquire another rental, yes. Please note that you must have
an intermediary, there are strict timelines, and you cannot take possession
of the proceeds of the sale. A good commercial real estatate agent should
be able to point you to a facilitator.

--
Phil Marti
Clarksburg, MD

[kastnna]

> "a12vman" <a12v...@hotmail.com> wrote:
> > If I am thinking about buying another property, would a 1031 Exchange
> > make sense in this case?

Yes, but the required intermediary will carry costs with it. Make
certain that the capital gain is large enough that it is worth the
1031 costs. Don't pay $3000 in 1031-related expenses to save $2999 in
taxes. Especially because a 1031 will carry-over your existing basis
in the new property, while paying the CG taxes could step-up that
basis.