How much should I set aside for capital gains?

[Ryan Cleary]

I currently own a duplex, incoming rent after management fees comes to $2256, mortgage is $1252. I obviously am setting a good portion of the cash flow aside for futureExpenses but how much should I be setting aside for capital gains? Is there a general rule of thumb?

[Ashish Acharya]

Originally posted by @Peter Mckernan:

@Ryan Cleary You pay on the sale of the property, not the income that you are generating. The income that you are generating either falls on a schedule C or you have it incorporated in an LLC which is a K1. I would for sure check with your CPA on either question of capital gains if you are selling or income tax.

 Peter that is not correct.

Ryan, your rental income is reported on Sche E.  It is not a capital gain. It will be taxed as ordinary income. If you have a loss, it might be limited based on your income level.

When you sell it, the half of the gain not taxable under section 121. Make sure you talk to your advisor.