How to maximize your after-tax profits on the sale of an investment property

By Harvey S. Jacobs

This is an article with a detailed answer to a question from a reader investor. The investor wants to know the tax implications of a property investment and how to maximize after-tax profits. The basic facts are that it’s a 10-year investment purchased for $400,000 and selling for $800,000.

The investor gives other details, such as renovation costs, settlement costs, real estate commissions, and seller credits to the buyer. The pre-tax profit is estimated to be approximately $330,000.

The writer begins the answer with a rundown of possible taxes the investor may have to pay, including:

  • Federal capital gains
  • State capital gains
  • Depreciation recapture
  • Net investment income tax

The writer explains capital gains tax basics, including the difference between short and long term gains. The article goes through the calculation of capital gains for the deal in question.

The most effective tax-saving strategy available is explained; the 1031 Exchange and the author goes on to explain the method and how capital gains taxes are avoided at the time of sale.

For all of the numbers for this real-world deal, read the entire article.

SCHEDULE MY FREE CALL

With Tax Hive’s years of experience in tax and business services, we use our expertise to make your life easier so you can focus on building your business. Ever changing rules require a team who knows you, your business and the tax implications. Our tax professionals meet your needs while helping you manage tax risk, control costs and reap maximum benefit. If you’re ready to get started, CLICK HERE to schedule a FREE strategy session with one of our specialists today.

Schedule your FREE 15 minute call now!
X
X

YOU'RE ALL SIGNED UP!

Please check your inbox for our confirmation email
and your free eBook.