"most people the first time that they do something like this they go my gains fifty thousand dollars..." flash back to my accounting class when the professor raised the same question 😂 I love how you demonstrated this with an example. Super easy to follow thru. I've been watching this series to refresh my knowledge of taxation and it's a really fun way to learn/review
Thanks for the video! If you have unallowed passive losses carried over from prior years, could they be used to offset the depreciation recapture or capital gains?
Do you have any videos showing how to take the carryover schedule E rental losses against the capital gains of the sale of the rental property? My software continued to show an unallowed loss.
Thanks for the informative video. I have a question about the qualification for the capital gain exemption of main residence. The 2-year and 5-year is confusing. If I buy it and sell it in 2 years and lived in it for those 2 years, do I get the exemption? Thank you.
Sold a rental recently and meeting with a CPA soon for help. This home was our first home over 20+ years ago. I don’t remember what the actual purchase price was exactly, how would I get that total? Paper work long gone. 😏
To calculate the capital gain or loss from the sale of a property, you generally subtract the property's cost basis from the selling price. The cost basis is essentially what you spent to acquire and improve the property, plus certain costs associated with selling the property, including realtor commissions.
What is cost basis if property was originally inherited? Last yearthey sold the inherited property but the proceeds were split among 4 decendents. Only 2 of them have been claiming depreciation on the property.
I lived in my rental property for 17 years. I rented it 2 years ago, and i know i have one more year grace to sell it without paying taxes. My question is, if I sell it after that period, I will need to add to the cost basis only the depreciation for the years I rented it, right? In this case, it would just be a 3+ year depreciation. Am I right?
If you are improving rental property, you either expense or depreciate the improvement depending on what it is. How long you depreciate it depends on the type of improvement.
How do I calculate the capital tax gain on a mixed use commercial property with living quarters of a 4370 sq ft store front where I lived in it on the 600 sq ft part of it with my wife and rented the remainder 3770 sq ft.? Please let me know. Thanks.
Great video- My question is I have a low wage income at about $80K filing jointly and would be selling a recent rental property with a net Gain (after depreciation and expenses) of $250K PLUS a deffered gain from the 1031 exchange of $700K = $950K Net Capital gain- However my income from wages /interest etc.. is at $80K so that capital gains rate is zero correct? I am trying to make sure I keep my Wage income under $80K so when I make the sale in 2025 my Capital gain rate is zero- Some have told me I owul not pay capital gains while others said I would by adding the gain to my income??
thanks for the video. why is your sale cost only 5%? what is included in it? I was expecting it to add up to around ~10% ( agent commissions, closing costs etc.)
The IRS bracket for capital gains is 0% up to $89,250 and 15% anything over up to approx $250k. However to calculate this you use your capital gains and your 1040 income to determine if you are over or under the threshold. My question is this... if you have income of say $50k and capital gains of say $70k giving you a combined number of $120k which is over the $89,250 threshold. Does that mean you pay the 15% on the entire $70k or on $30,750 which is the amount of capital gains which is over the $89,250 threshold?
I have a property I have built new back in 1988, I have no records of what it actually cost. Have been depreciating it for years since new, would that information be on my tax returns?, Would love to run the numbers on what taxes in net would be to sell it, I think the values around 450k. I'm think it would be a good time to sell my rentals before the market drops
When calculating capital gain from the sell of a rental property, is the gain from the depreciated cost basis or cost basis after the depreciation recapture? e.g. bought at $100,000, sold at $200,000, had $50,000 in depreciation. would it $100,000 capital gains (tax) plus the tax on the $50,000 depreciation recovered or $150,000 capital gains? Would it be different if you want to take advantage of a Section 121 capital gain exclusion that you are intitled to?
Brandon, This was an excellent video, providing in-depth explanation while easy to understand. Thank you for sharing. I do have a follow-on question. I am planning on some updates to fix some structural issues of a long-term rental single-family dwelling prior to sale. Would this be subtracted here in the capital gains? I would assume it would be added to other selling costs (5% in your example) to determine initial "net of selling costs"?
Thanks so much for the video, quick Q, 14K tax+7.5K selling cost is about 21.5K. Percent that by 50K then tax is about 43 % ? Shouldn't the depreciation of the building(16K) be subtracted from the sales price ?
I have some expenses related to maintenance that are partially depreciated, a roof, furnace ect. Is the depreciation from those items also included in determining step one net basis? Also, what happens to the remaining balance of those items that have not been depreciated? Where do I claim the balance on the roof for example.
Many Thanks. I followed your calculation with mine. The last piece where you talked about tax on recapture and tax on capital gain was super helpful. I had. missed that. The tax rate ( unrecaptured section 1250) may be zero for income less that $41,675. Is that correct?
Hello Brandon... when speaking of selling Rental Property, is the handling of things the same when you're speaking of Rental Property used in a Trade or Business (i.e. client is in the business of renting properties and thus uses a Sched C, etc) and a Rental Property held by a taxpayer who uses a schedule E to report his her earnings (i.,e. NOT in the Trade or Business)
Hello, what is your total depreciation is greater than your net gain? for example total depreciation 100K, and total net gain 80K. Then do you pay 25% recapture on 100K + LT cap gain on the 80K?
Hello Brandon, my question is regarding capital gains tax from selling a rental and I am retired over 65yr and on SSecurity. My annual income is less than the $70k and I have been told by friends that I am not responsible for paying capital gain taxes if I am in that situation. Do you know if there is a way I should file to take advantage of that? And are you aware of that benefit?
I'm trying to figure it out on my own and I'm NOT an accountant. I owned a condo rental for 5 years and depreciated the appliances each year. I'm selling now. Do I still use your method in the video or something different? Are the appliance depreciated over 27 years to get a yearly average? Stumped!
great video. The example didn't mention anything about loan balance and/or rehab costs that would affect your adjusted gains on purchase. How do you account or factor in those two pieces into figuring out the adjusted (taxable gains)? Thanks!
Great info. I had 2 questions, First, why did you deduct from your 100k rental dep of 16k twice, from the adj. Basis and later from the gain of 58.5. Second, i sold a rental with over 25 years depreciation, that virtually offset my basis. Do I have any advantages to reduce tx on 100k by been old, over 70, and with incomes less than 60k? Thanks
Fantastic video! Question: if the seller has losses carried over from the previous year or current year from being a LP in a syndication, will the losses off-set the $14,115, assuming there is at least $14,115 of K1 losses? Thanks!
Great video! Is section 1250 depreciation recapture where straight line method was used for rental property, always 25 percent or does it depend on income bracket.
I’d like to lay this out and have you to tell me where I stand with it if I sell. Initially, my mom had a wheel that said her home would go to me and my brother. My brother needed some financial help, so I told him I would buy his half for $40,000. My mom then put the house entirely in my name as she continued to live in it until she passed so, technically it has been in my name for the past seven years. She died two years ago and of course paid no rent. So, is this inherited property, as the will initially implied, it would be mine and my brothers. Or is it gifted property since she put it in my name before she passed only because I was willing to help my brother out financially. Again, I paid him 40,000 and the house was entirely placed in my name. so, is this a gifted house or is it an inherited house also, the land that she built the house on was given to her by me and my husband.
Life of the property. Assumes the value will be zero in 27.5 years. There are different ways to do depreciation though. I used 20 year straight line. I was hoping he would cover capital gains when income is low or zero.
Several questions: 1. What if this was my primary home first and I stayed in it for more than 2 year, say 6? 2. I then move out for 15 years, rent it out, and then sell it? 3. After 15 years, I move back into this property making it my primary home and then sell it? What will be the tax calculations be like? Many thanks.
Let’s say you had zero income one year but one million dollars capital gains( net sale-cost basis). Your Adjusted gross income is zero. That means you pay 0% on one million dollar profit? If so, I would quit my $75,000/year job for one year. If I keep my job I have to pay 10% of a million in taxes. If I quit, 0% . If I quit for one year, I come out $25000 ahead.
![How Are Cash Out Refinances Taxed? [Tax Smart Daily 021]](http://i.ytimg.com/vi/-fJMdbcmcMk/mqdefault.jpg)
![How Are Cash Out Refinances Taxed? [Tax Smart Daily 021]](/img/tr.png)
"most people the first time that they do something like this they go my gains fifty thousand dollars..." flash back to my accounting class when the professor raised the same question 😂
I love how you demonstrated this with an example. Super easy to follow thru. I've been watching this series to refresh my knowledge of taxation and it's a really fun way to learn/review
Thanks for the kind words :)
Thanks for the video!
If you have unallowed passive losses carried over from prior years, could they be used to offset the depreciation recapture or capital gains?
Do you have any videos showing how to take the carryover schedule E rental losses against the capital gains of the sale of the rental property? My software continued to show an unallowed loss.
Thanks for the informative video. I have a question about the qualification for the capital gain exemption of main residence. The 2-year and 5-year is confusing. If I buy it and sell it in 2 years and lived in it for those 2 years, do I get the exemption? Thank you.
Hi, Thanks for the video. Can I reinvest the capital gain from the rental property to my primary residence loan that recently purchased?
what about unrealized passive losses?
Sold a rental recently and meeting with a CPA soon for help. This home was our first home over 20+ years ago. I don’t remember what the actual purchase price was exactly, how would I get that total? Paper work long gone. 😏
When we're doing the sale of the property which form are we using
Where do you put the colossal amount of money you pay for realtor (broker) to see your property?
To calculate the capital gain or loss from the sale of a property, you generally subtract the property's cost basis from the selling price. The cost basis is essentially what you spent to acquire and improve the property, plus certain costs associated with selling the property, including realtor commissions.
@@TheRealEstateCPA clear! Thanks!
Can you go over the capital gains rate you pay? In this video you assumed maximum.
What is cost basis if property was originally inherited? Last yearthey sold the inherited property but the proceeds were split among 4 decendents. Only 2 of them have been claiming depreciation on the property.
I lived in my rental property for 17 years. I rented it 2 years ago, and i know i have one more year grace to sell it without paying taxes. My question is, if I sell it after that period, I will need to add to the cost basis only the depreciation for the years I rented it, right? In this case, it would just be a 3+ year depreciation. Am I right?
in which part do you subtract your mortgage payoff?
Does the interest expense reduce the tax due? I have had a mortgage on my property that was originally purchased as my residence.
What if you have capital losses from stocks or other real estate?
what about improved property? can i deduct for my improvement expenses over the time i owned the home?
If you are improving rental property, you either expense or depreciate the improvement depending on what it is. How long you depreciate it depends on the type of improvement.
How do I calculate the capital tax gain on a mix use commercial income property with living quarters.
How do I calculate the capital tax gain on a mixed use commercial property with living quarters of a 4370 sq ft store front where I lived in it on the 600 sq ft part of it with my wife and rented the remainder 3770 sq ft.? Please let me know. Thanks.
QQ: is depreciation deducted from a full price or with full minus land? In this case should it not be 90k - 16k?
Great video- My question is I have a low wage income at about $80K filing jointly and would be selling a recent rental property with a net Gain (after depreciation and expenses) of $250K PLUS a deffered gain from the 1031 exchange of $700K = $950K Net Capital gain- However my income from wages /interest etc.. is at $80K so that capital gains rate is zero correct? I am trying to make sure I keep my Wage income under $80K so when I make the sale in 2025 my Capital gain rate is zero- Some have told me I owul not pay capital gains while others said I would by adding the gain to my income??
How is the depreciation and expenses affecting to the property sale tax when I had a refinance ?
thanks for the video. why is your sale cost only 5%? what is included in it? I was expecting it to add up to around ~10% ( agent commissions, closing costs etc.)
The IRS bracket for capital gains is 0% up to $89,250 and 15% anything over up to approx $250k. However to calculate this you use your capital gains and your 1040 income to determine if you are over or under the threshold. My question is this... if you have income of say $50k and capital gains of say $70k giving you a combined number of $120k which is over the $89,250 threshold. Does that mean you pay the 15% on the entire $70k or on $30,750 which is the amount of capital gains which is over the $89,250 threshold?
Good question.
I believe that's it's taxed at the portion amount of the tax bracket.
$50,001 - $89,250 = 15%
And everything over that bracket at the next bracket .
If MFJ, you will have close to a $30 standard deduction. So you will only have a few thousand dollars of capital gains to be taxed at 15%.
I have a property I have built new back in 1988, I have no records of what it actually cost. Have been depreciating it for years since new, would that information be on my tax returns?, Would love to run the numbers on what taxes in net would be to sell it, I think the values around 450k. I'm think it would be a good time to sell my rentals before the market drops
When calculating capital gain from the sell of a rental property, is the gain from the depreciated cost basis or cost basis after the depreciation recapture? e.g. bought at $100,000, sold at $200,000, had $50,000 in depreciation. would it $100,000 capital gains (tax) plus the tax on the $50,000 depreciation recovered or $150,000 capital gains? Would it be different if you want to take advantage of a Section 121 capital gain exclusion that you are intitled to?
Brandon,
This was an excellent video, providing in-depth explanation while easy to understand. Thank you for sharing.
I do have a follow-on question. I am planning on some updates to fix some structural issues of a long-term rental single-family dwelling prior to sale. Would this be subtracted here in the capital gains? I would assume it would be added to other selling costs (5% in your example) to determine initial "net of selling costs"?
Yes when you perform rehab work, it's capitalized to the basis and reduces the gain as a result.
Thank you
You have explained this very well.
Is there any way to know the accumulated depreciation as of current date based on the tax filing?
I completely suck at numbers, that is why I have a tax guy who is well-versed in the real estate tax arena.
What if the depreciation amount (straight line 27.5 years) is more than the cost of purchasing a condo 33 years ago with the cost of $82,000 ? thanks
Thanks so much for the video, quick Q, 14K tax+7.5K selling cost is about 21.5K. Percent that by 50K then tax is about 43 % ? Shouldn't the depreciation of the building(16K) be subtracted from the sales price ?
Fantastic video! Learned a lot! Your examples make everything so clear!!! it helped me with my pending decision for my rental!
Awesome, are you selling it?
Thanks for this great information.
I have some expenses related to maintenance that are partially depreciated, a roof, furnace ect. Is the depreciation from those items also included in determining step one net basis? Also, what happens to the remaining balance of those items that have not been depreciated? Where do I claim the balance on the roof for example.
Many Thanks. I followed your calculation with mine. The last piece where you talked about tax on recapture and tax on capital gain was super helpful. I had. missed that. The tax rate ( unrecaptured section 1250) may be zero for income less that $41,675. Is that correct?
It would help you’d write in words next to some of the important numbers, so we can hold on to what the numbers refer to. Thanks.
Hello Brandon... when speaking of selling Rental Property, is the handling of things the same when you're speaking of Rental Property used in a Trade or Business (i.e. client is in the business of renting properties and thus uses a Sched C, etc) and a Rental Property held by a taxpayer who uses a schedule E to report his her earnings (i.,e. NOT in the Trade or Business)
Great video as always
What valuation should i use to calculate depreciation? Is it the tax assessors?
Cost basis
Hello, what is your total depreciation is greater than your net gain? for example total depreciation 100K, and total net gain 80K. Then do you pay 25% recapture on 100K + LT cap gain on the 80K?
Following
Hi Brandon, i have a question on rental real estate. can we connect
Please reach out at www.therealestatecpa.com!
What if you do a 1031 and the property that you replace is only 40% of the price of the sale of yor properties?
You can't. Wth A 1031, the new property value has to be higher than the one you are selling
Why did you 20% long term Capital Gains vs 15%? Then plus 3.8% 18.3%?
Hello Brandon, my question is regarding capital gains tax from selling a rental and I am retired over 65yr and on SSecurity. My annual income is less than the $70k and I have been told by friends that I am not responsible for paying capital gain taxes if I am in that situation. Do you know if there is a way I should file to take advantage of that? And are you aware of that benefit?
I'm trying to figure it out on my own and I'm NOT an accountant. I owned a condo rental for 5 years and depreciated the appliances each year. I'm selling now. Do I still use your method in the video or something different? Are the appliance depreciated over 27 years to get a yearly average? Stumped!
great video. The example didn't mention anything about loan balance and/or rehab costs that would affect your adjusted gains on purchase. How do you account or factor in those two pieces into figuring out the adjusted (taxable gains)? Thanks!
Those costs should be capitalized on your balance sheet and would reduce your total gain as a result of a higher basis.
Great info. I had 2 questions, First, why did you deduct from your 100k rental dep of 16k twice, from the adj. Basis and later from the gain of 58.5. Second, i sold a rental with over 25 years depreciation, that virtually offset my basis. Do I have any advantages to reduce tx on 100k by been old, over 70, and with incomes less than 60k? Thanks
Fantastic video! Question: if the seller has losses carried over from the previous year or current year from being a LP in a syndication, will the losses off-set the $14,115, assuming there is at least $14,115 of K1 losses? Thanks!
What about improvements I make just prior to sale? Obviously they aren't reflected in depreciation.
Add improvements to the basis.
Great video! Is section 1250 depreciation recapture where straight line method was used for rental property, always 25 percent or does it depend on income bracket.
Unrecaptured 1250 gain is the straight-line building depreciation. Top rate is 25% and scales based on the capital gain rate table.
I’d like to lay this out and have you to tell me where I stand with it if I sell. Initially, my mom had a wheel that said her home would go to me and my brother. My brother needed some financial help, so I told him I would buy his half for $40,000. My mom then put the house entirely in my name as she continued to live in it until she passed so, technically it has been in my name for the past seven years. She died two years ago and of course paid no rent. So, is this inherited property, as the will initially implied, it would be mine and my brothers. Or is it gifted property since she put it in my name before she passed only because I was willing to help my brother out financially. Again, I paid him 40,000 and the house was entirely placed in my name. so, is this a gifted house or is it an inherited house also, the land that she built the house on was given to her by me and my husband.
I know you were keeping things simple, but capital improvements and some buying costs increase your cost basis, correct?
Yes indeed!
Currently, aren’t you allowed to exclude about $90,000 of Gains?
I believe currently you wouldn’t have any gains taxes wise!
Am sorry about that they give me 79 .00 I I make copy n return to theme am inocent
Where did you come up with $27.5 years for depraciation on a property that you own for 5 years??????
Life of the property. Assumes the value will be zero in 27.5 years. There are different ways to do depreciation though. I used 20 year straight line. I was hoping he would cover capital gains when income is low or zero.
Selling 1 this year. I dread the taxes. It seems like you're penalized.
Your punishment for working hard is pay crazy taxes and if you keep for long time
Several questions:
1. What if this was my primary home first and I stayed in it for more than 2 year, say 6?
2. I then move out for 15 years, rent it out, and then sell it?
3. After 15 years, I move back into this property making it my primary home and then sell it? What will be the tax calculations be like?
Many thanks.
my accountant told me if u live in it for 2y u pay nothing w max capital gain of 250k/ single or 500k/couple
Let’s say you had zero income one year but one million dollars capital gains( net sale-cost basis). Your Adjusted gross income is zero.
That means you pay 0% on one million dollar profit? If so, I would quit my $75,000/year job for one year. If I keep my job I have to pay 10% of a million in taxes. If I quit, 0% .
If I quit for one year, I come out $25000 ahead.
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