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Updated over 8 years ago on . Most recent reply
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WHOLE truth on RE taxes
We've seen discussions on Capital Gains(CG) taxes - - but that's just the tip of the iceberg as they say.
I elected to liquidate my holdings, withdrawing from RE, and to watch the paint dry.
I knew there were other choices (REIT, TIC,...) but I wanted to be at ZERO debt and no obligations. At 72, it's time I spent time with family and friends and to enjoy the golden years.
I am disclosing the tax obligation this choice created so you don't make bad assumptions such as CG would be the whole tax consequence of a liquidation.
Here' what my CPA projects for the 2016 tax year: Net Gain 600k on the sale of 6-units...
Looks like we will owe the feds about $145,000 and the state an additional $27,000 (I already deducted the amount withheld at closing; Calif 3.5%).
- Due to the higher AGI, $30,000 of your social security is taxable.
- Plus the high AGI puts you into the alternative minimum tax, which will cost you an additional $10,000 of tax,
- PLUS your AGI makes you responsible for the net investment income tax, An additional $16,000 added to your tax bill there.
NET NET; total fed 145k, total Calif State 50k, or 195k of the sales proceeds.