Capital Gains Indiana

[Cheryl Naegel]

Hi everyone!  I just sold my Indiana rental property on December 5.  I purchased it in 1994 and lived there until 1999.  I then moved and rented it out until 2003.  I then moved back in until 2004.  It has been a rental since.  

I do not know where to begin pertaining to capital gains and what I can claim.  Is there a list somewhere?  I have all yearly tax forms and expenses.

HELP !     THANKS!

[Christopher Phillips]

@Cheryl Naegel

Did you have any gains?

You'll have to pay capital gains if you had a gain. You'll need to speak with a CPA.

There is a capital gain exemption if you lived in the property 2 of the last 5 years ($250,000 single, $500,000 married). Since that isn't the case, you'll have to pay capital gains.

It will be long term capital gains since you owned the property for more than one year.

You could have potentially avoided that with a 1031 exchange, but since you closed December 5th, you probably don't have enough time to find another property and do the exchange, since you would need to identify a new property within 45 days.

Capital gains on a property is generally calculated as such:

Selling price - selling costs - adjusted basis = realized capital gain or loss.

Example:

$100,000 selling price

-$5,000 selling costs

-$30,000 adjusted bases (purchase cost, plus improvements, less depreciation).

= $65,000 realized gain.

Then you would pay capital gains on the realized gain based on your tax bracket.

The adjusted basis is your original cost plus capital improvements (roof, or HVAC) and less depreciation.

It's minus the depreciation because you benefited from depreciation while you owned the property so now they want to recapture that in the calculation.

How much you will pay for capital gains depends on your tax bracket and also which state you live in, because some states will also charge you for the sale.

You can go to various online calculators to give yourself a high level guess if you have to pay or not:

https://apiexchange.com/capital-gain-tax-calculato...