Selling a property acquired through 1031 exchange

[Janice R.]

All 1031 experts!

I sold a condo in 2006 and used a 1031 exchange to buy a townhouse.  This year we will sell the townhouse.  I'm having a hard time calculating the taxes owed.  Depending the taxes, we may just to another 1031.

Here's some estimated numbers from 2006 (from Form 8824):

FMV of condo: $196000

Adjusted Basis of condo:  $104000

FMV Townhouse: $353000 (proceeds plus cash from Home Equity Loan)

Realized gain (line 19):  $249000

Deferred gain:  $249000

Basis of townhouse (line 25):  $104000

SO,

What happens when we sell (may net about $300k)?  Other information:

Capital improvements 2007-2015:  $50000

Depreciation $7000 per year

Thank you!!

[Mark Creason]

Originally posted by @Janice R.:

All 1031 experts!

You will pay 25% on your depreciation recapture.  Federal Capital Gains will most likely be 15% but could run 20% on your profit.  The IRS now charges a tax for medicare of 3.8%.  You may not meet the threshold for that.  You also would incur state capital gains tax if the state the property is in has state capital gains tax.  There are several exchange guys on here that will probably at more to this.

Mark