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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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If I sell a building for $650,000.00 and gave 500,000.00 for

Customer Question

If I sell a building for $650,000.00 and gave 500,000.00 for it when I build it in 1997 how much capital gain taxes will I be liable for?????
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  Stephen G. replied 1 year ago.
That will depend upon the amount of your other income in the year you sell the building. It will also depend upon the depreciation over the last 20 years, which if it was a commercial building would represent approximately 50% of what cost you allocated to the building verses the land when you purchased the building.Let me give you an example. When you purchased the building for $500,000., and if you allocated $100,000. to the land, that would leave $400,000., for the building. If you depreciated 50% of it, that would leave $200,000. of remaining basis in the Building plus the land of $100,000., for a total of $300,000. If you sell the building for $650,000. that would result in a gain of $350,000. ($650,000. - 300,000. = $350,000). Depending upon your other income, the most likely total federal tax would be $20% of the gain or $70,000.If you decide to provide some of the financing yourself on the sale, you could defer some of the income taxes over the period when you collect the principal on the sale, while at the same time earning a good return on the mortgage note. Something to consider.

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