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Updated over 7 years ago,
Taxes after selling a rental property
Team BB,
How much money should I hold onto from the sale to prepare for tax time?
I had a tax question I was hoping you could answer about a rental that I've recently sold (did not do a 1031). There's three places I've identified were I could have (or have already paid in advance) to pay taxes but I'm not sure. I could be completely wrong. The rental was bought for 244k and sold for 262k. I had the home for 10 years and benefited from depreciation.
- The portion of the gain. In my case it's 262k-244k = 18k. 18k would then be taxed at 20% (or 25%)?
- Depreciation recapture. In my case it's 244k-44k (10 years of depreciation). The 44k would be taxed at 15%?
- CA Franchise tax board. Escrow withheld .0333% = $8724.60 as a prepayment come tax time. I have no idea where this came from, it was like a sniper in the woodline.
Is the amount in #3 is intended to pay a part of #1 or #2, or if it's a separate tax? I also don't know if my understanding is correct for #1 & #2?
Given that escrow is holding onto $8724.60 I want to know what I will have to pay, if anything, come tax time?
Thank you in advance for tackling this!
Tobey