Capital Gains on selling a Rental

4 Replies

Hi everyone. First i would like to say thanks to everyone and anyone who has helped in the past. My wife and I formed an LLC to purchase a Rental Property that we have had rented for the past 6 months. Now we are weighing our options to keep renting it out or to sell it but i am not sure how the Capital Gains work on a Rental in Pennsylvania. Any advice??

get a good cpa, but if you sell without doing a 1031 exchange you will pay capital gaines tax on anything over the basis for the propety, minus expenses like commissions and the like.

If you have the property for less than 1 year and 1 day you will be taxed at ordinary income levels; more than 1 year and 1 day it would be taxed as long term capital gains.

You can look at structuring a 1031 Exchange transaction to defer the payment of your capital gain taxes if you want to reinvest in another rental or investment property.

You have a short-term hold, so you need to make sure that if you are audited you can demonstrate that you had the intent to hold for investment. If you can delay selling so that your holding period is closer or beyond the one year point, it would be easier to demonstrate that you had the intent to hold for investment.

Bill, I bought the property in Feb. Of 2013 so I am over the 1 year mark. Like I said we rented if for 6 months now but got the property very cheap and did a total remodel and think I can make a very nice profit but didn't want to get crushed on the taxes. I don't have to sell, just wanted to check options.

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