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Roger
Roger, Attorney
Category: CA Real Estate
Satisfied Customers: 31028
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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I have a property purchased in California in 2001. I bought

Customer Question

I have a property purchased in California in 2001. I bought and lived in the house for 7 years before I purchased a second residence and converted the first property to a rental. I would now like to sell the first house, but I am worried about capitol
gains taxes on the property since it is now an income property. I stand to profit approximtely $150,000 when I sell the house and I do not want to use the profits to buy another property, I would rather put the money towards some other investments (mutual
funds, etc). WIll I be required to pay capitol gains taxes on the profits from the sale , or is there some way I can avoid that?
Submitted: 1 year ago.
Category: CA Real Estate
Expert:  Roger replied 1 year ago.

Hi - my name is ***** ***** I'll be glad to assist.

Unfortunately, you will owe capital gains taxes on the profit you make from this income property UNLESS you do a 1031 exchange....which is where you use the profit from this sale to purchase a similar investment property. If you don't do that, you'll have to pay taxes on your profit. However, you can reduce your profit by deducting your expenses from that amount....this can be anything from repairs made, taxes paid, etc. An accountant can advise you regarding ways to reduce the actual gain after all available expenses are deducted.