Capitol Gains On Rental Property
I purchased a rental property over a year ago. Purchase price was $200k. I put a down payment on the property of $100k and financed the remaining $100k. Recently I was offered $300k for the property. If I sold the property would my capitol gains basis be $100k? If I wanted to purchase another property and defer any tax, what amount would I need to reinvest in the new property? $100k? $200k? $300k?[ Edited by rdash on Date 02/26/2005 ]
Your basis is likely near $200K. It is equal to the purchase price plus capitalized closing expenses plus improvements less depreciation.
If you are referring to a 1031 tax deferred exchange the amount you will invest tax deferred is the net proceeds from the sale. If you reinvest less, you will be subject to capital gains tax on the cash you pocket.
the tax man gets his
Amount you need to reinvest in a 1031 to be completely tax deferred is gross proceeds (sales price). In this case - $300K.