Too often we receive calls from rental property owners who have neglected to complete critical steps to execute a successful real estate exit strategy. Regretfully, we encounter many investors who have not fully considered the tax consequences of selling their rental properties. The sale of rental properties and the resulting tax consequences are more complex than the sale of personal property. For the latter, the calculation of gains and losses is generally straightforward: you simply subtract your original purchase price from the final selling price. The tax consequences for selling rental property will depend not only on the original purchase price and the selling price but also on:
- Capital improvements made to the property
- The carry-over tax basis of prior properties that may have been exchanged into the property that is being sold
- The recovery of available depreciation benefits (whether used or not BTW!)
To complete a full tax code Section 1031 tax deferral, many investors forget that they must 1) purchase a replacement property of equal or greater value and 2) replace both the full net proceeds or equity plus any related debt that existed on the sold property.
Please contact us at 866 398-1031 for answers to general questions. As always, please consult a qualified tax advisor for advice on your specific tax situation.
FGG1031 is an affiliate of First Guardian Group and is headquartered in San Jose, California. Our team consists of highly experienced real estate and investment professionals who have provided services to thousands of clients across the US for more than 12 years.
At FGG1031 we specialize in providing a custom 1031 exchange experience by working with the investor one-on-one throughout the entire 1031 exchange process. We provide advice on selecting suitable 1031 Exchange options including properties structured as a Delaware Statutory Trust (DST) as well as access to the wholly owned real estate across the US.