3 Tips for Calculating Capital Gains Taxes

When you sell a piece of real property at a gain, you will more than likely owe capital gains taxes on the sale. It’s important to get an idea of what this tax burden will be prior to selling your property so you can prepare yourself for the sticker shock (and consider deferring these taxes with a 1031 exchange). In this article, we are going to offer a few tips for calculating your capital gains taxes on your next real estate sale.

Capital Gains Taxes on the Sale of Real Estate

In a nutshell, here’s how to calculate your capital gains taxes on the sale of real estate:

• Net Adjusted Basis. First, you need to calculate your net adjusted basis by subtracting depreciation from the original purchase price, then adding capital improvements.

• Capital Gain. Next, you need to calculate your capital gain by taking the sales price and subtracting the net adjusted basis. Then take that number and subtract the sale cost.

• Capital Gains Tax Burden. Finally, you need to calculate your capital gains tax burden by adding your depreciation recapture and your federal and state taxes.

Use our Capital Gains Tax Calculator

Trying to manually calculate your capital gains taxes can be an arduous task. That’s why we have put together a free tool that you can use to calculate your capital gains taxes quickly and easily. Check out the calculator here:

Capital Gains Calculator

Decades of Experience with 1031 Exchanges

Exchanging property under section 1031 of the Internal Revenue Code can be a complex ordeal. That’s why it’s a good idea to work with a qualified intermediary who has experience with facilitating exchanges of like-kind property. At CPEC1031, we bring more than two decades of experience to the table. We can prepare all of your documents, answer all of your questions, and make sure you have all of your bases covered. Contact us today at our downtown Minneapolis office to chat with one of our intermediaries about your 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

2 Calculators to Help you with Your 1031 Exchange

When it comes to 1031 exchanges, the more tools you have at your disposal, the better off you’ll be. In this article, we offer two free calculators to help you through your 1031 exchange.

Capital Gains Tax Calculator

Use the below capital gains calculator to get a rough estimate of the capital gains tax you will owe on the sale of your property. Note that this is only meant as a general guide and may not represent your actual capital gains tax.

1031 Exchange Deadlines Calculator

There are critical timeframes you must follow when you are doing a delayed 1031 exchange. The key numbers are 180 days (the total amount of time you have to complete your exchange) and 45 days (the amount of time you have to make either receive your replacement property or submit your written identification). This calculator will help you determine your timeline.

Note: due to the COVID-19 pandemic, the IRS has released Notice 2020-03 that may extend 1031 exchange deadlines. As a result, this calculator may not be entirely accurate. Please contact us with any questions you have about your 1031 exchange deadlines.

Minnesota Qualified Intermediaries

At CPEC1031, our Minnesota qualified intermediaries have over two decades of experience helping taxpayers with their 1031 exchanges of real estate. We have the knowledge and the skills to ensure that your exchange is successful. Contact us today to learn more about our process and how we can help you save money in capital gains taxes on the sale of real property. Our primary office is located in downtown Minneapolis. We also have numerous satellite offices around the country!

• 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.

© 2020 Copyright Jeffrey R. Peterson All Rights Reserved

How to Calculate Your Capital Gains Tax

When you sell a piece of real estate, you are typically required to pay capital gains taxes on the sale of that property. A 1031 exchange can help you defer these taxes, but many taxpayers first want to know how much they are going to owe in capital gains taxes when they sell property. In this article, we are going to explain how to calculate your capital gains tax when selling real estate.

Calculating Your Capital Gains Taxes

Figuring out your potential capital gains taxes is a good demonstration of the benefits of doing a 1031 exchange because it shows you how much you can save. Here are the basic steps to calculate your capital gains tax:

• Determine your net adjusted basis by adding the capital improvements to the original purchase price and subtracting depreciation.

• Calculate your actual capital gain on the property by taking the property sales price, subtracting the net adjusted basis, and finally subtracting the cost of sale.

• Finally, determine the capital gains tax owed by combining your depreciation recapture, federal, and state taxes.

Capital Gains Tax Calculator

To make things even easier for you, we have developed a simple calculator that you can use to calculate your capital gains taxes.

Minnesota Real Estate Exchange Company

If you are looking for a way to defer your capital gains taxes on the sale of real estate, consider a 1031 exchange. At CPEC1031, we have been facilitating like-kind exchanges of real property for our clients for decades. We can help you through every step of your 1031 exchange by answering your questions, preparing the requisite 1031 documents, and advising you on the details of your exchange. Contact us today to see if you are a good candidate for a 1031 exchange!

• Start Your Exchange: If you have questions about capital gains taxes and 1031 exchanges, feel free to call me at 612-643-1031.

Defer the tax. Maximize your gain.

© 2017 Copyright Jeffrey R. Peterson All Rights Reserved