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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 54848
Experience:  29 years of experience as a tax, real estate, and business attorney.
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Hello, I have a 1031 tax deferred exchange question. I

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I have a 1031 tax deferred exchange question.

I purchased a property (Property A) for $84,000.00 in 2005 and sold it two years later for $164,000.00. I sold the property and completed a 1031 tax deferred exchange and purchased another property (Property B) for $168,000.00.

Now I need to sell Property B, but it’s only worth about $155,000.00 (and I owe about $132,000.00). Do you have an idea as to what my capital gains tax would be?

Thanks for your assistance!

Good morning. Your basis is going to be $84,000 and your sale proceeds are going to be $155,000 (less closing costs). Your debt amount is not relevant. Thus, your gain is going to be $155,000 less $84,000 = $71,000.



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The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.


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Customer: replied 5 years ago.

I appreciate your prompt reply. The capital gains is $71,000.00, but based on the information I provided, do you know what I would pay in taxes on that gain? 15%? 20%?



Customer: replied 5 years ago.

I appreciate your prompt reply. The capital gains is $71,000.00, but do you know -- based on the information I provided -- what I would pay in taxes? 15%? Thanks!

If you are in the 0% - 15% marginal income tax bracket (including this gain), then the federal tax rate on the capital gain is zero. Otherwise, the federal capital gain rate would be 15%.
Customer: replied 5 years ago.
I didn't include this as part of my original question, but the property in question is an investment property. Does that make any difference? Sorry for this oversight. That's my final question, so I won't bother you again. Thanks again for your assistance. You were a big help!
No worries.....Yes...same result. Take care!