Capital Gains Question

[Orion McCabe-Gould]

Might be a simple question but if a rental is sold from an LLC what amount is used to calculate capital gains tax. The sale price or the net amount after commissions, loans, etc. are paid off?

[Jon Holdman]

The LLC and any loans are irrelevant. Your "gain" is the selling price, less all selling costs (including commissions), less your "basis". Your basis starts at the price you paid, plus purchase costs, plus capital spent getting the property ready to rent, plus any capital improvements made after it was ready, less all deprecation (taken or allowed, whichever is greater). Then the gain is divided into two parts. One is for the tax on unrecpatured depreciation. That is the amount of gain up to the depreciation taken or allowed (again) whichever is greater. That's taxed at your ordinary rate, though capped at 25%. Then the remaining gain is taxed as short or long term capital gains.

Again, any loan payoff is irrelevant for this purpose. The fact its in an LLC is also irrelevant. The transaction flows through to your personal tax return (or multiple people's tax returns, if this is a partnership.)

You really want a knowledgeable accountant.  This is complex stuff, especially if you're spent money fixing it up and improving it.