Capital Gains

Your new property would have a basis of $32K, value $110K. Your $130K delta is what gets taxed.

Of course, you'd need to reduce by sales expenses, etc.

Thanks ever so much for your input.

1. Since this is a CA property. How much will the capital gains tax be?

1. Another related question: if the depreciation recapture dollar amount is more than the "net" capital gain (after the purchase of the replacement property), then after being taxed on the depreciation recapture (25%), will there still be any federal capital gains tax to be paid?

So in our example let's say the dep recapture is 150k and the net gain is 130k (after the repl prop purchase), I understand that will be a dep recapture tax of 25%, but then is there any federal capital gains tax to be paid since it is a negative figure (130k-150k = negative 20k)

Please let me know

Thanks in advance for your response.

Depends on your CA-source income. California has a fairly steeply progressive tax rate structure and no preferential capital gains rate. For 130k in taxable income the rate will be a blend, but less than 9%. For a quick estimate you could look at

There is a good bit of detail on the calculations at

Jackie, if you *sell* the rental property and then *buy* a replacement property, you don't have an exchange, you have a fully-taxable sale, since you received the proceeds of the sale directly, not the like-kind exchange property.

And please don't use Investopedia as a learning tool. It doesn't seem to have a good grasp on the income tax issues that it claims to be explaining.

Thanks for your replies.

1. Earlier, per the posting , I did look at investopaedia. It does not address what if the dep recapture>net Cap Gains?

If anyone can help me with the question below, I would appreciate it very much:

If the depreciation recapture dollar amount is more than the "net" capital gain (after the purchase of the replacement property), will I only be taxed on the Dep recapture for Capital Gains purposes?

So in my example let's say the dep recapture is 150k and the net capital gain is 130k (after the repl prop purchase of 110k), For Cap Gains purposes, will I only be taxed on the Dep Recapture at 25%? or will there be more capital gains taxes to be paid?

1. Thank you reply, Yes, I will use a 1031 Exch company to do the transaction.

Jackie, you would probably benefit from studying the difference between "depreciation recapture" and "unrecaptured Section 1250 gain." It's an important distinction, especially in the taxation of like-kind exchanges, but I don't see it anywhere in your addressing this problem.

So, does all the unrecaptured 250 gain and depreciation recapture appear as some or all of the boot? Or is it pro-rated among the boot and the replacement property?

I'm pretty sure that income up to the amount of the net boot received will be recognized, ordinary (recapture) income first, and then unrecaptured section 1250 gain (which is really just a part of the section 1231 gain), and finally regular old section 1231 gain, but I'm chagrined to say that I don't know how to give you any support or authority for that.

If that's what the question was...