In any typical real estate transaction, if you’re selling a piece of property you are going to have to pay capital gains taxes on the net proceeds from the sale. But many taxpayers aren’t sure how to calculate these potential capital gains taxes. In this article, we are going to explain how to calculate your capital gains taxes in a like-kind exchange of real estate.
1031 Exchange Capital Gains Taxes
Putting the numbers together and calculating your capital gains tax burden on the sale of real estate can really show you how much you stand to save by doing a 1031 exchange.
The following is a basic breakdown of how to determine your capital gains tax burden during a real estate transaction:
Step 1 – Calculate your net adjusted basis. This is achieved by taking the original purchase price, subtracting depreciation, and adding any capital improvements.
Step 2 – Calculate your capital gain. This is achieved by subtracting the net adjusted basis from the sales price, and then subtracting the cost of the sale.
Step 3 – Calculate your capital gains tax burden. This is achieved by adding up your federal and state taxes, as well as your depreciation recapture.
Use Our Capital Gains Calculator
For your convenience, we have also put together a free calculator that you can use to calculate the capital gains taxes on your real property.
Click here to use our capital gains calculator.
Contact a Like-Kind Exchange Professional
CPEC1031, LLC has decades of experience in the like-kind exchange industry. Our qualified intermediaries are well respected in Minnesota and across the country. We partner with each of our clients to provide top-notch professional services. Contact us today at our downtown Minneapolis office to speak with one of our 1031 qualified intermediaries about how to defer your capital gains taxes on the sale of real estate with a 1031 exchange.
Start Your 1031 Exchange: If you have questions about 1031 exchanges, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
© 2021 Copyright Jeffrey R. Peterson All Rights Reserved