My total basis is $145,268. - $77,879 (depreciation recapture) = $67,389(new basis) and if I only invest a total of $90,000 of the $265,000 that we sell the property for, will I pay capital gains on $107,611?
$265,000(sales price) - $67,389(basis after recapture) - $90,000(new investment) = $107,611?
I just want to be sure that is the way I understand that.
Also, if that is the case, how do I let IRS know I am purchasing the new property to avoid the gains tax on that part?
Do I only have a certain amount of time to make this purchase?
