Rental Property Capital Gain Tax

[Parm Becah]

Hello, I purchased a home in 1997 for $165,000 in Texas and lived until 2015. I rented out this home and purchased a new home as my principal residence. After renting out my old home for almost 6 years, I am considering selling it now and curious about capital gain taxes as the house is now worth about $450,000. When calculating capital gain tax, what is considered as the purchased price? Is that $165,000 or the value of the house in 2015 when I rented the house which was about $325,000 according to county tax information? Thanks!

[Dave Foster]

@Parm Becah, Your basis in that property is the lessor of your acquisition price or what it was worth when you put it into service.  You got a heap of gain and tax built up.  I agree with @Joe Funari, If you don't want a big tax bill and are interestedin continuing in real estate investing you need to consider a 1031 exchange which allows you to sell investment real estate and buy replacement investment real estate and indefinitely defer all tax on gain and depreciation recapture.