WHOLE truth on RE taxes

[Jeff B.]

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%).

1. Due to the higher AGI, $30,000 of your social security is taxable.
2. Plus the high AGI puts you into the alternative minimum tax, which will cost you an additional $10,000 of tax,
3. 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.