Capital Gains on sale

[Guillermo Lopez]

I am selling my investment property through my company and what I like to know is capital gains is reported the year of the sale or 12 months from the sale? Is there a CAP on capital gains? If I reinvest the net proceeds of sale into another property would I still have to report capital gains? Thank you for the advice Bigger Pockets Universe.

[Dave Foster]

@Guillermo Lopez, You're blessed that the property is in FL.   If you too are a resident then you will only be dealing with federal capital gains and depreciation recapture.  15 or 20% probable capital gain rate.  25% probably of depreciation recapture.  You're on the right track with reinvestment.  But it would have to be structured as a 1031 exchange specifically.  You'll need to have a qualified intermediary involved before you close your sale.  And you won't be able to just reinvest the net proceeds.  In order to defer all tax you'll need to purchase at least as much replacement real estate (any type as long as it's investment real estate) as your net sale and use all of your net proceeds to do that.  @Jacob Sampson it's 180 days for the entire exchange period.

If you want to continue investing the tax deferral of a 1031 is a powerful tool.