Tax repercussions of selling a rental

General Landlording & Rental Properties
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Tax repercussions of selling a rental

Sharon Carson
Rental Property Investor · Thousand oaks, CA · Member since 2020 · 18 posts · 3 votes

I'm trying to "crunch the numbers" in regards to the tax repercussions of selling my rental, and doing a 1031.

OR, moving back into it for 2 years and realizing the 250k tax break.

Trouble is, I bought this as raw land 30 years ago, took 20 years to owner build it. I have NO idea what my "Cost basis" is!!

It's been a rental for 10 years now.

Any thoughts? (Property is in HI, I reside in CA)

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  • Basit SiddiqiBusiness Member
    Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
    5y

    @Sharon Carson

    Speak to your tax advisor to understand what the tax burden would be upon sale.

    You should know what the tax basis is if you are treating it as a rental.
    The current depreciation is based on the tax basis.

    Regarding section 121 exclusion - There are different rules if you treated it as a personal residence then investment property vs investment property first and then personal residence.

    Best of luck

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  • Sharon Carson
    OP
    Rental Property Investor · Thousand oaks, CA · Member since 2020 · 18 posts · 3 votes
    5y

    Thanks! 

    This WAS a personal residence.  I became an "accidental Landlord."

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    5y

    @Sharon Carson You definitely need a CPA’s guidance. A couple of points to be aware of though. 
    —you can’t get the full section 131 exclusion since it has been a rental for 10 years. Any exemption limit, if you moved back into it for 2 years would be prorated between the owner occupied years and the non owner occupied years. As a duplex, this would further to only approximately 1/2 of the pro rated exclusion. 
    —you will have depreciation recapture whether or not you ever took it.

    —you’ll have to figure out your cost basis before you can do anything else

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