Year-end strategy to lower taxes for landlords

[Kenny Tan]

I sold a rental house in 2015 for a 55K gain (after subtracting costs of sale, upgrades, etc). Depreciation recapture was painful. When I finally got a TurboTax Premier and modelled the sale, I was surprised the gain from the rental house (11 years holding) was not treated as Long Term Cap Gain, instead it was categorized as Ordinary Income (Form 4797 Sale of Business Prop). The problem is I cannot offset this gain with other LT cap losses that I have from stocks. LTCG rate would be lower for us. In addition, the boost in total income pushed us out of additional IRA limits for tax reduction.

I have 2 more rental properties that I can use to expense somewhat to lower the total taxes , but there is only so much I can do for this year that will be deductible.

I'd love to hear what you'd do to reduce the tax bill from selling a rental.

Kenny

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[Matt Motil]

Sounds like a job for super accountant @Brandon Hall