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New Member

Capital Gain

Hi I just found out That i had to pay capital gain on one of my properties I sold back in 2017 and no one brought it to my attention I bought the property back to in 2014 I was 26 yrs old with no clue on how Real eastate worked but because I sold the property for $50000 how much should I pay back now that is 2019 I wanted to do everything right..

Thank you
2 Replies
Level 3

Capital Gain

You have to figure out your basis and accumulated depreciation.  Taxes on sale of the property involve depreciation recapture tax and capital gain tax.  Depreciation to be used is the allowed or allowable, which means if you didn't depreciate as you were required to do, you still have to pay depreciation recapture tax anyway as if you did.  There are exceptions, and not a whole lot more can be said without further information. 

Level 2

Capital Gain

The "Tax Basis" is the fulcrum of this transactiion.  Tax  Basis is calculated typically as follows:

Purchase Price + Improvement Costs - (Accumulated  Depreciation) (Depreciation may or may not apply) = Tax Basis.  The Tax Basis is then compared to the Sales proceeds ($50,000)  to calculate gain or loss.  If the Sales proceeds exceed Tax Basis the difference is the amount of the gain.  In reverse and you have a loss.