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Application of the formula below for the estimation of potential
capital gains tax on the sale of investment property is intended for illustration purposes only. Any Exchanger contemplating
an IRC 1031 exchange of investment property should consult with their respective legal or tax advisors to determine the suitability
of any IRC 1031 tax deferred exchange.
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Step 1.
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Calculate Adjusted Basis:
Original
Purchase Price
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$______________
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Add:
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Non-expensed Improvements
Sub-total
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+
=
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______________
______________
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Less:
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Depreciation Taken
Adjusted Basis
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-
=
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______________
$______________
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Step 2.
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Calculate Capital Gain:
Sales Price
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$______________
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Less:
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Adjusted Basis
Sub-total
|
-
=
|
______________
______________
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Less:
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Transaction Costs
Capital Gain
|
-
=
|
______________
$______________
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Step 3.
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Calculate Capital Gains Tax Due:
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Multiply:
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State Applicable Capital Gains Tax Rate
State Capital Gains
Tax
|
x
=
|
______________
$ ______________ (1)
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|
Multiply:
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Federal Capital Gain Tax 15%
Applicable to
Tax on Appreciation
|
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15%
$______________ (2)
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Multiply:
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Federal 25% Tax Rate on
Depreciation Recapture
Tax on Depreciation
Recapture
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x
=
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$ 25%
$_____________ (3)
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Add:
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Figures 1+ 2+ 3 = Capital Gains Tax Estimate
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$_______________
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| |
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*The Capital Gains Tax Estimate is for illustrative purposes
only and is the estimated amount that maybe deferred using an IRC 1031 exchange.
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