Taxes Payable - and how 1031 helps?

[James W.]

Hi gys -

I am planning to sell my Investment Property that I bought in 2012. 

I'll do an example below just to understand the taxes payable.

• Can someone with real experience relate if they really had to pay these taxes?
• Which of these does 1031 defer? All? Some?

Lets say I bought a condo at 650K. Sold it at 1220K.

Paid 10K in improvements, 10K in closing costs, 50K in commission.

Net Profit = 1220 - 650 - 10 - 10 - 50 = 500K

Depreciation Claimed over years = 50K

Therefore, Capital Gain = 500K + 50K = 550K

Taxes Payable:

Fed Capital Gain = 15% of 500K = 75K

Depreciation Recapture = 25% of 50K = 12.5K

NJ State Capital Gain = 8% of 550K = 44K

Total Taxes = 132K

Effective %age  = 26%          [  132K / 500K gain ]