Capital Gains Tax Questions

[James Schulte]

We are residents of Missouri and have a Florida LLC that owns a short-term rental home in Destin, Florida.

We have owned it for almost 4 years now and would like to sell the home.

The purchase price was $779,000 and sale price will be $1,200,000.

We understand that we will pay federal capital gains and we understand the depreciation recapture aspect but we are unsure exactly what taxes we will be on the hook for since we are residents of MO and the home & LLC are in Florida.

Do we also have to pay MO income tax on the gain even though the LLC and house are in FL?

Is the gain from the sale added to our income to determine which federal capital gain rate we will pay?

Our normal income falls in the 15%($77,201-$250k) bracket.

Thank You

[Dave Foster]

@James Schulte, The LLC is probably irrelevant. First because it is probably a disregarded entity that doesn't file it's own tax return. All activity of the property has been reported on your personal 1040. Second though, because you are first going to be subject to whatever MO demands are. Most states give you credit for tax paid in another state. But FL doesn't take anything. So MO will want their full share.

@Charlie Cameron Has the right idea if you want to continue investing in real estate the 1031 exchange will indefinitely defer all tax on gain and depreciation recapture.