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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 585
Experience:  10 years experience
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How much will I pay in capital gains tax if I sell my commercial

Customer Question

How much will I pay in capital gains tax if I sell my commercial building? I have always sold and purchased through a 1031 exchange.
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.
Hi and welcome to our site!If you plan to do that sale via section 1031 again - you would continue to defect the gain.However if that woudl be a regular sale - you woudl calculate the gain based on the basis which was carried to that property during the last section 1031 exchange.That basis woudl be adjusted by improvements. depreciation, etc.The gain is calculated as (selling price) MINUS (adjusted basis)
Customer: replied 2 years ago.
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Customer: replied 2 years ago.
Can you help me to calculate that?
Expert:  Lev replied 2 years ago.
If you know that basis from the last exchange and adjustments - then calculations woudl be relatively simple.
Expert:  Lev replied 2 years ago.
How do you compute the basis in the new property?It is critical that you and your tax representative adjust and track basis correctly to comply with Section 1031 regulations.Gain is deferred, but not forgiven, in a like-kind exchange. You must calculate and keep track of your basis in the new property you acquired in the exchange. The basis of property acquired in a Section 1031 exchange is the basis of the property given up with some adjustments. This transfer of basis from the relinquished to the replacement property preserves the deferred gain for later recognition. A collateral affect is that the resulting depreciable basis is generally lower than what would otherwise be available if the replacement property were acquired in a taxable transaction.
Customer: replied 2 years ago.
your answer is to complicated for me to understand. I have owned property for 30 years and always did a 1031 exchange. Do I have to calculate from all the other properties or just the last one to this one?
Expert:  Lev replied 2 years ago.
You do need to keep track of your basis every year - and make adjustments.If you correctly kept track for your basis - you may start from the last exchange.If however - you did not keep track of your basis - that might be really complicated issue - and you need to go far back
Expert:  Lev replied 2 years ago.
If the property is fully depreciated - then your basis is zero.You may verify with your accountant - what is accumulated and remaining depreciation amounts.Also - the land is not depreciated - so you woudl have a positive value of the basis of the land.That means - you need to track separately the basis for the land and for the building.I may help with calculations - but you woudl need to find all that information.
Customer: replied 2 years ago.
ok. let me talk to my accountant.
Expert:  Lev replied 2 years ago.
What exactly you need - following:- the basis of the property after last 1031 exchange - separable for the land and for the building.- accumulated depreciation on the building- any adjustments for the basis - such as improvements, etc.- expected sale price - apportioned to the land and the building (use same percentage as in the tax record)- estimated sale expenses