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Stephen G.
Stephen G., Financial Advisor
Category: Capital Gains and Losses
Satisfied Customers: 7119
Experience:  Senior Tax Expert; CPA/PFS(retired)Personal Financial Planner; Small Business & Professional Mergers & Acquisitions
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I purchased a house in 2009, invested 12.4K in improvements,

Customer Question

I purchased a house in 2009 for 85K, invested 12.4K in improvements, rented it for 5.5 years, and sold it in 2015 for 109K. It was not my principle residence. Can you give me an estimate of my capital gains exposure for 2015?
Thank You Jim Roosen Michigan
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Stephen G. replied 1 year ago.

First of all, the actual capital gains tax will depend upon the total of your other taxable income.

Also, it depends upon how much of the original purchase price you allocated to the land which is not depreciable.

The depreciation on the building should have been based upon the amount allocated to the building + improvements divided by 27 1/2 years x the 5.5 years that you rented the property. That depreciation will reduce your tax basis in the property, increasing the capital gain.

I doubt that your federal tax would exceed $6,000. - $8,000., just using rough estimates.

In Michigan, the highest capital gains tax rate is 4.3%.

So, basically your 25% set aside should be sufficient as long as you compute the capital gain properly.

Expert:  Stephen G. replied 1 year ago.

Just Checking in to see if you have had a chance to review my response to your question & to see if you have any follow-up questions that I may respond to for you: