question about capital gains

[Bridget Clark]

I have owned a mixed use commercial building for over 10 years, there are two income producing apartments upstairs and the street level is an unfinished commercial space ready to be built out for a business. I have been approached about selling and I think I may be asked to carry a mortgage on the property. I am fine doing that with a good down payment but I am wondering how capital gains tax works in that situation. According to the new brackets, I am in the 22% category so 15% capital gains.  My question is will I be paying the 15% on the full purchase price (minus basis items) or is the tax on just the down payment and then on the principal paid to me each year on the mortgage?  I paid almost nothing for the building so I never depreciated that on the taxes, I think that means I can included that in the basis ( I hope I am using that word correctly.)  The numbers are as follows:  I think the sale price will be around $90,000. I paid $2,300. at a property tax sale. I have items I believe can be included in the basis totaling about 15,000. (purchase price, remodeling costs not deducted on taxes already, survey costs, attorney fees for the closing documents)  Thank you in advance. 

[Andrew Kerr]

@Dave Foster you have some insight here? 

@Bridget Clark - I believe it is something like: you would owe tax on the gain, minus basis plus payback (this isn't the correct accounting term) on any depreciation taken. Dave Foster might give you some insight and ideas on rolling into a 1031.

But it might make sense talking to your accountant to get exact numbers on your basis and any depreciation.