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06-16-2017 01:20 PM - edited 06-16-2017 01:26 PM
Location: Texas (Dallas County)
Selling my condo that I have owned for the last 13 years.
It has been rented for the past 6 years
Bought for $116,000
Selling for $149,900
What do i need to consider for taxes when selling the condo? Will this be treated as capital gains and i need to keep a portion of the profits to use for next years tax return (that i use H&R Block for)?
Any advice would be great
Solved! Go to Solution.
06-16-2017 02:37 PM
Welcome to the H&R Block community.
Yes, you'll want to save at least 15% of the gain on the sale for taxes. I would save at least $5,000 going based on a $33,000 gain (your selling price less your basis).
Since you rented the condo for the last six years you will not meet the requirements to exclude the first $250,000 from income, so your entire gain will be taxable for the capital gains tax.
If your income level, including the $33,000 gain, is in the 33% tax bracket or higher then you'll want to save 20% of the gain instead of 15%.
There is no state income tax for Texas, but if you permanently reside in a state that has an income tax you should also take that into account and save an extra 5% or so of that gain for the state. In states that have an income tax all of your income is taxable no matter where the income comes from.
Your gain may be less if you made any improvements, such as new appliances or a new bathroom, to the condo over its life. Improvements increase your basis and lower your capital gain.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)
04-25-2018 11:58 PM
05-01-2018 11:59 PM
I don't know all of the ins and outs of selling rental property, but I do know the following:
1) You'll need to make sure you adjust your basis by whatever depreciation you were eligible to take during the period that you rented the property, even if you didn't claim the depreciation on your tax return for the years it was being rented. This will decrease your basis and likely increase the tax you owe.
2) There are special rules for military when it comes to being eligible for the capital gain exclusion. (You can qualify for a period of suspension of the 5-yr test period.) If you can qualify for the capital gain exclusion, given the info you've provided you wouldn't owe any tax on the capital gain.
See Pub 523: https://www.irs.gov/pub/irs-pdf/p523.pdf for more info.