Capital Gains Tax Calculator
Use this calculator to estimate the capital gains taxes that would be due as a result of the sale of an investment property. Although this handy calculator can help you avoid tedious number-crunching, it should only be used for a back-of-the-envelope approximation. You should not rely on this calculator in lieu of advice and guidance from a tax or legal professional.
Investors can lose 20–35%+ of their capital gains to taxes, however if the proceeds from the sale of an investment property are reinvested according to certain rules, these taxes can be deferred indefinitely. These rules are spelled out in section 1031 of the Internal Revenue Code, so this kind of tax-deferred exchange is often called a “1031 exchange”.
The basis for calculating capital gain, however, remains the same after a 1031 exchange. So, although the taxes may be deferred, they cannot be eliminated within an investor’s lifetime. However, if an investor wills a property to an heir, the tax basis steps up to fair market value. The heirs may then take full advantage of the tax benefits of real estate ownership. They will even receive a new “depreciation schedule”, which provides a tax shelter for some of the income they may receive from the property.
If you want a 1031 expert to review your personal situation and show you passive income-producing real estate investments that qualify for use in a tax-deferred exchange, CLICK HERE.