How Much Tax I Paid When I Sold a Rental Property

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🎙️ Episode 159 - When you sell a rental property, you might be surprised by how big your tax bill could be! This video (and the free spreadsheet included) will show you exactly how to figure out the taxes you owe on a rental property. Coach Carson uses a real-life case study of a rental he recently sold, and he shares the exact numbers and step-by-step process of his tax situation on this rental.
▶️ Next Video: My First Rental Property (17 Years Later) - How Much Cashflow I Actually Made • My First Rental Proper...
🎬 Topics Covered:
0:50 - Disclaimer
1:11 - Property background
3:38 - Depreciation
7:10 - Adjusted cost basis
9:46 - My Personal tax rates
12:21 - Calculating taxes on a spreadsheet
17:54 - What I actually paid in taxes
18:59 - Depreciation recapture calculation
23:59 - Capital gains calculation
25:39 - Closing thoughts
🔗 FREE Spreadsheet from Video:
www.coachcarson.com/sellrenta...
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Опубликовано:

3 июн 2024

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Комментарии : 229

@briand4000 5 месяцев назад

Bottom line, you get RAPED by the IRS when you liquidate rentals. It is absolutely horrible. You take all the risk, do the work, deal with renters, for years on end then when you get tired of it and just want to retire, the feds hammer you. We're getting ready to sell a highly appreciated duplex in a couple of years and the tax bill will be breathtaking...and infuriating. Well-presented information, albeit sobering in scope!

@tinacoladda8006 Год назад

WOW! This should be used as an example how a CPA should explain taxes to his clients. You've done a fantastic job, you seriously have a teaching talent. I haven't found another person on youtube even closely as good in explaining this subject. Thank you!

@CoachChadCarson 10 месяцев назад

thank you so much! That's a big compliment. I appreciate you watching and I'm glad it was helpful!

@mariabalderas5785 9 месяцев назад

Thank you so much for your video, it is really helpful, can you share your free spreadsheet, please.

@santiagoescalambre4738 4 месяца назад

Agree

@mjaldrich7 2 года назад

Thank you for this important video. Wish I had seen in 10 years ago before I sold my rental property..If I had known what I'd have to pay in taxes I would had never sold it. Not being informed about taxes can be a painful lesson.

@sargonoshana2324 Год назад

Exactly my situation as well, sold my 4 unit 5 years ago. Now i realize you just don't sell investment property.

@Fedgery007 Год назад

You did an excellent job explaining this!

@rhondazh 10 месяцев назад

I was searching RU-vid for videos to help me better understand the tax implications of selling a rental property we’ve owned for 25 years! Excellent content and appreciate the real life examples using personal income tax rates. New subscriber!

@CoachChadCarson 6 месяцев назад

thank you for watching and the comment!

@jonhollingsworth6984 Месяц назад

Great job as usual coach!

@TRAININGVIDS-ey2ew 2 месяца назад

Love you for this Carson! ❤ big help

@user-qo6vx6ne4i 2 года назад

Thank you for sharing this brother man. You have certainly earned a new subscriber, respectfully!

@DTM45 Год назад

Screw this. When it is time to sell a property, move into it and make it your primary residence for two years. Then, zero tax.

@CoachChadCarson Год назад

I wish it worked like that. But there is a proration of taxes still based on how long you live there. Tax doesn't go away after 2 years moving back in.

@stevenmflores 5 дней назад

Basically Taxes freaking suck

@seanmckay9194 2 года назад

Very timely as we are looking to sell a few rentals. Phenomenal breakdown! You are right, there is very little content on this topic and you did a great job breaking it all down in a thorough manner. Thanks so much for the info Coach!

@CoachChadCarson 2 года назад

Appreciate the feedback Sean!

@aleclatulippe 2 года назад

Super informative video!!!! Thank you!

@KevinOst Месяц назад

Well done coach. Thanks for taking the time to fully explain this topic in layman’s terms!

@stephanieryder3633 2 года назад

You are a true Mentor! Thank you for ALWAYS sharing youe knowledge. I appreciate you.

@CoachChadCarson 2 года назад

My pleasure! Thank you for the awesome feedback, Stephanie. I appreciate you (and others who benefit from the videos).

@lagansam6226 2 года назад

Great video as always coach, keep going for us who are interested in big stuff!

@CoachChadCarson 2 года назад

Thanks! Will do!

@hdtwal1den 2 года назад

Great video. Very, very helpful.

@quarterspringfarm5671 2 года назад

Thanks for the info, coach! Helpful as always. Thanks for taking the time to educate and help.

@CoachChadCarson 2 года назад

You bet! I appreciate the feedback. And thanks for watching.

@torrencead82 2 года назад

You read my mind Coach! I've been considering selling my rental property within the next year. I knew I needed to run the numbers, but I had no clue how to start. Thank you for such an easy-to-follow video on how to figure this out. The way you teach is exactly why I follow you. I appreciate your content.

@CoachChadCarson 2 года назад

Thank you Ashley! Glad it was helpful, and I hope the spreadsheet will be useful for you on your rentals.

@12reachpenny 2 года назад

THIS is exactly why I have admired you since the day I met you! BRAVO Coach!

@CoachChadCarson 2 года назад

Awww. Thanks old friend. I appreciate you saying that Penny. Good to hear from you.

@xayxanayang222 2 года назад

Awesome. Thanks for taking the time to do the videos.

@CoachChadCarson 2 года назад

Glad you like them! My pleasure.

@theodorebekiarides5013 5 месяцев назад

GREAT SHOW

@m2gautam 2 года назад

I used TurboTax and it guided me through this complex calculation.

@mikedundon1217 2 года назад

Excellent video. I may be selling a few properties soon. This was a great overview- thanks Chad!

@CoachChadCarson 2 года назад

Thanks Mike. It's definitely better to plan this stuff before you sell! Let's you consider your options.

@jenniferressmannwriter 9 месяцев назад

Thanks for this helpful info 👍

@scottwhitley2242 Год назад

My man! Thank you for the 411!

@sharonpichai6655 2 года назад

Great video! Planning to rewatch!

@CoachChadCarson 2 года назад

Thank you Sharon!

@TheEvanDanteShow 2 года назад

Best real estate channel on RU-vid for education!

@CoachChadCarson 2 года назад

I really appreciate that feedback! Makes the work on the videos worthwhile;)

@lvteachme973 2 года назад

As always,, great lesson from a great teacher. Thanks Coach!

@CoachChadCarson 2 года назад

Thank you for watching!

@lvteachme973 2 года назад

I am signing up for your course next cycle. Please keep me informed of the date via email. Thank you.

@CoachChadCarson 2 года назад

@@lvteachme973 will do! The next course is actually coming up on 9/13. So stay tuned!

@a.s.america 10 месяцев назад

this is a great video i saved it as a great example thank you sir

@leonornoel3743 2 года назад

Thank you very much I it is very much great explanation. This is what I need right now

@kimturner1070 2 года назад

Love the bucket illustration!

@CoachChadCarson 2 года назад

thank you!

@jovi922 Год назад

Very useful information. Thank you . 😊

@CoachChadCarson Год назад

Thanks for watching!

@tc3690 2 года назад

Awesome video

@Jarnagua Год назад

Sub. Clearest explanation about recapture and capital gains on the net. Thank you.

@CoachChadCarson Год назад

Glad it was helpful! Thanks for the feedback and the sub.

@amyb.894 2 месяца назад

Great video

@DSLACA 2 года назад

Thanks for the video I'm liking and subscribing!

@CoachChadCarson 2 года назад

Thanks for the sub!🙏

@waleedabdellatif9806 Год назад

Excellent advice !

@CoachChadCarson Год назад

Thanks for watching!

@faithfulwordministries3449 Год назад

Thank you for taking the time to give us this spreadsheet. Beats napkins, haha.

@njacehi8814 Месяц назад

Great video..

@mauricioramirez2813 2 года назад

Great video! Thank you.

@CoachChadCarson 2 года назад

Thank you for watching!

@robhemmerle643 2 года назад

As a finance/spreadsheet junkie, this was a perfect video. I had heard a lot of people mention the depreciation recapture but this was the most in depth video I’ve seen on it’s impact. Thanks for walking through it in so much detail!

@CoachChadCarson 2 года назад

It's the finance/spreadsheet junkie club!! Glad it was helpful, Rob. I had noticed that there aren't many explanations out there so I hope this will fill the void.

@robhemmerle643 2 года назад

@@CoachChadCarson if you do the 1031 exchange and buy another property, how do you recapture the depreciation on the next property? Do you have to keep track of multiple properties worth of depreciation so once you finally sell it all that you can track it all the way back?

@CoachChadCarson 2 года назад

Good question. With a 1031 exchange you move your basis from the old property to the new/exchanged property (including any depreciation). Then any depreciation on the new property just gets added to that.

@ButchWhitehouse Год назад

Enjoyed the video and the explanation. It's also worth noting that even if you don't claim depreciation you will still owe the tax(IRS Rules) and if your income (including your capitol gain) puts you over a certain amount there is another tax called net investment tax that will take another 3.8% of your gain. Income tax, capitol gain, depreciation recapture, net investment tax....word's I wish were not in my vocabulary.

@CoachChadCarson Год назад

yes! very important point. I've heard people say "I just won't take the depreciation. Then I won't have to recapture it." Wrong! IRS will get you on that.

@wilsoneashoian5789 3 месяца назад

Then take that $4K divide it by numbers of hours you worked to keep that rental. Let's say 500 hours in 13 years. $4,000/500= $8 per hour plus the stress.

@tweetybird7668 2 года назад

Wow, great tutorial. I'm using TurboTax and I didn't want to believe my taxes owed, so I found your video for the detailed explanation. I only have 1 (3br) apartment that I bought in 2007 to have my 3 daughters (ea 3 yrs apart) and 2 of their friends lease the house. I just sold it 12/31/22 (15yrs) and I didn't realize how the recapture depreciation plays a huge part in taking much of my capital gains away after all of those headaches I had to put up with from the tenants calling me saying the toilet is overflowing, fixing broken doors, windows, cutting grass, plus all the sweat equity and $$ it cost me to fix it up to be one of the nicest houses on the street. I'm disappointed of the tax I had to pay, so much that I was about to get with a tax accountant thinking I'm doing something wrong. Thanks Coach, this is the best explanation on RU-vid.

@CoachChadCarson 2 года назад

glad it helped! Yeah, this whole transaction can be mysterious to a lot of us. But once you run the numbers and understand the different pieces it makes sense (even though the tax bill isn't fun!! Agree on that!). Best of luck with your property.

@leighannebrown-pedersen7536 Год назад

I got crushed by a rental during COVID and sold it in 2022. I wish I saw this earlier this year. I calculated pre-payment of taxes based on long term capital gains calculators and I had never heard of depreciation recapture before. I owe so much this year it actually makes me ill. If I saw this earlier, at least I would have known. Thank you so much for the breakdown of information.

@CoachChadCarson Год назад

I'm sorry you got surprised by the extra tax. It is unwelcome news for sure. I hope this video will help others avoid what you had to deal with.

@fivestar000 Год назад

Would you have kept it and not sold it

@leighannebrown-pedersen7536 Год назад

@@fivestar000 current market trends see little property owners getting out and corporate conglomerates coming in. Taxes are done and I still made a little. Albeit less than expected. It’s a cautionary tale for small time investors. If you can’t do a 1031 exchange, then be ready.

@BG-wm2tw 2 года назад

Good video!!

@CoachChadCarson 2 года назад

Glad you found it helpful, BG! Thanks for watching.

@TZach1987 Год назад

Basically the government givETH (depreciation) and then takETH (depreciation recapture) when you sell the property. Why not come up with a better system to help people that own one or two rental properties? These byzantine rules REALLY make the taxes overly complicated unless you have a good tax accountant on hand

@mjaldrich7 2 года назад

I would personally like to see a video regarding the book keeping/management of receipts and expenses for tax purposes. You might have to bring in your CPA to speak to these topics obviously but I know I'm not the only landlord whom has some questions about this. Thank you sir

@CoachChadCarson 2 года назад

Thanks for the feedback. I agree that'd be a fantastic topic. I already have some ideas, and I've put them on my content list for future videos.

@Actrogy1 2 года назад

Hi Coach, do you have a video on how to transfer property from primary resident into an LLC? Is it a good idea to transfer a property from primary resident into an LLC after a more than 2 years primary resident if I want to rent that property? Any tax benefit for an LLC vs individual?

@obie1coby 8 месяцев назад

Wow I see why the 1031 is so useful. Imagine if you had done a cost segregation, you would've owed more than your check

@CeciliaMarieAngela 2 месяца назад

I was hoping one of these videos would get more in the weeds on what closing costs can be included and what can be considered an improvement and what can't.

@mdeliam39 6 месяцев назад

Thank you so much for your video and the very helpful spreadsheet. I'm looking for the "companion video" mentioned in the spreadsheet to understand what my ordinary income tax rate is. If you get a chance, could you paste a link to that video. Again, thank you for this and your other videos!

@lisarechsteiner2618 2 месяца назад

Hey Coach, the spreadsheet looks dope! Is yours done in Quick books? Im interested in using your cpa or tax person. I didn’t see their info in comments or show notes

@nicolauschrist3135 Год назад

Coach, what are the tax forms needed to report the "gains", "depreciation recapture" and the "tax" that will be owed for each? it seems there should be additional forms need then just Schedule D and form 8949? I used your formulas, which is a great asset thanks for making it available, but having trouble plugging the numbers into the IRS forms? can you help me out?

@ednasalinas8280 2 года назад

Your explanation is GREAT, not much like this on YT. Definitely will Subscribe. I have a rental property under my single member LLC. To take advantage of the primary residence capital gains exclusion, I plan to move back to this property for 2+ years and then sell. Do I have to change the ownership in the deed from LLC to my name in order to count the 2 of 5 years of primary residence?

@TheZambranoj45 2 месяца назад

I am presently doing my taxes and sold a rental property. So I'm hoping to follow your instructions on doing my tax return.

@CoachChadCarson 2 месяца назад

good luck! hopefully the free spreadsheet will help you as well.

@getinthespace7715 4 месяца назад

I'm moving to an area with a huge short-term rental market. Of the 4k population, there are over 1k short-term rentals. Drives property values way up. I'm saving to buy property and build my own house this summer. I can put $250k into a lot, permits, property improvements, and home construction materials and build a house worth over $600k-750k. Sell one every 2 years as my primary residence and make a bunch of profit. Alternatively, I could build smaller, cheaper places and build a bunch of rentals. Due to the high property values and property taxes, double on anything that isn't your primary residence. The math works out better for building living in and selling under section 121 exemption vs. building, holding, and renting. Elevated property taxes would eat up too much of the rental income, and you lose the tax benefit after the 5 year window.

@johngerald3102 Год назад

can you do a similar video showing the example of selling rental houses using passive losses

@bestaff 2 года назад

Very thorough. So what would you consider good? If you had a 10k net after taxes as opposed to the 3k?

@profusionlifetv7183 2 года назад

Great video but I must say the amount of money we pay in taxes is outrageous.

@bradmartin4253 Год назад

Hey Carson, thank you so much for this awesome content. You do a really great job of explaining and using visual aids. Got a question for you. I'm thinking about buying a house that will be my primary residence and then renting out the downstairs out as a short term rental. It looks like I have to take depreciation - based on the percentage of area compared with the total square feet of the entire house. Let's assume I rent out 15% of my house for 10 years while I live in the other 85% as my primary residence. Then after 10 years, I sell the house. Do I have to recapture all the deprecation I've taken over the 10 years on that 15% of my house that I had rented out? If so, do you think I could get out of the recapture by taking the downstairs off the rental market for the last two years before I sell? The assumption is I would be living in 100% of the house full time for over two years before I sell.

@michaelbidegain1455 3 месяца назад

Does the Depreciation still apply if you live in the property for over 2 years and thanks for the content and spread sheet

@uredskivid 2 года назад

You are great ! Thanks for explaining all this .Now is there a soft ware program that help do this work ?

@CoachChadCarson 2 года назад

thanks Redd. I either use this spreadsheet that I have linked in the description or ask my CPA to help me do it.

@HighCountryRambler Год назад

I just sold a rental home to my son, and gifted half the value to him. Paid $115k 20 years ago, valued at $350k when I sold it to him for $200k. I owned it free and clear and put about $8k in upgrades over 20 yrs. I just stroked a check to the state and IRS for $32k combined based on my CPA's results. I'm looking forward to plugging my numbers into your spread sheet to check his work. *Worth noting* - The IRS allows me to break up the payments into 6 payments into next year , so the money I set aside for taxes from the sale, I put it into a money market fund returning +-5%. Its about the only positive outcome from this shellacking. Tks for the video.

@CoachChadCarson Год назад

Thanks for sharing your story. Yes, it can be a shock to see the tax bill - even in a situation like yours where you sold it at a lower price to a family member. Hopefully it will be a good rental property for your son.

@julhe8743 4 месяца назад

Great video 🙏 my question is if I rent a property for 7 years and later I Mede this rental property my primary residence for 2 years. If a sell the property after 2 years I have to pay the recapture taxes for the 7 years? 🙏🙏

@brendaalexander2991 7 месяцев назад

great video. I have a property that i purchased 18 years ago on a 1031 tax exchange,. I am looking to sell that property now. what basis do I start with to determine the capital gain .

@CeciliaMarieAngela 2 месяца назад

Do you have any videos showing how to take the carryover schedule E rental losses against the capital gains of the sale of the rental property? My software continued to show an unallowed loss.

@chrisleigh2238 Год назад

Hey Chad, thank you for the concise video! It really helped me understand taxes a little more in regards to rentals! I was curious, did your equation need to include fica taxes as well or are those not paid until a later date? Thank you!

@CoachChadCarson Год назад

Thanks for watching Chris! Rental income is not normally subject to FICA tax. As investment income it's categorized and taxed differently than your normal salary or self employment income would be.

@chrisleigh3033 Год назад

Right on! Thank you for the info. I have heard “so longs you do not have your RE license, you do not need to pay FICA”

@natusfreedom472 Год назад

How do u , defer the taxes .. 1031 exchange , maybe show a example , of how it’s done ✅ Thx

@kkutube1972 2 года назад

I just take due to seller times 15% and save that for tax. Sold 3 homes so hopefully, I have saved enough.

@byronhaley5947 2 года назад

Wish there were more videos like these ...great video

@CoachChadCarson 2 года назад

Glad you enjoyed! I'll plan to do more in the future.

@303Estates 10 месяцев назад

Great video!!! question... on your spreadsheet, "total depreciation" ... do you add up all the depreciation write-offs over the years since you purchased it... Thanks!

@CoachChadCarson 10 месяцев назад

yes, that's correct! My CPA tracks our depreciation and records it as an expense each year on our tax return. So, that's where I get the number in my case.

@mike73ng 8 месяцев назад

That was easy!

@CoachChadCarson 8 месяцев назад

glad to hear it!

@woodrowwildcat3286 Год назад

When a property is sold for strictly land value, does this change the calculations? I sold mine and they are being torn down, several already demolished. Thank you.

@alexbryan87 Год назад

Good video thanks for the info. Just some feedback though that the music in the background is super annoying. There were several spots in the video where I had to rewind and listen twice because the music was so distracting.

@CoachChadCarson Год назад

thanks for the feedback, Alex.

@sargonoshana2324 Год назад

This video is too late for me, sold my building paid a lot in taxes five years ago. But i think if i watched it, i wouldn't believe it. But if i did believe it, i wouldn't sell my property. Good video.

@CoachChadCarson Год назад

Selling real estate you've held for a while can mean a big tax hit. No doubt. It's why most people hold or do a 1031 exchange. Thanks for sharing your story.

@JuanitaHernandez Год назад

On what tax form do you put the capital gains and on what form the depreciation recapture?

@jennifer750 2 года назад

Could you send me the spreadsheet the link isn’t working for me? Thank you!!

@user-td1cp2js1g 4 месяца назад

Can you please send me the calculation spred sheet?

@barryzeigler4502 9 месяцев назад

What about the cost of the land? Is that deducted from your basis somewhere??

@richvillacres2793 3 месяца назад

Thanks Coach. So, if I make too much to do a standard yearly deduction for depreciation I have to deduct it passively when I sell it correct? I can’t use it as a deduction against my annual ordinary income right? Thanks so much and love your channel!

@CoachChadCarson 3 месяца назад

That's correct. Those excess losses you can't use now carry forward to when you sell and can offset taxes owed then.

@karentan1681 7 месяцев назад

What about carry forward losses? How is that treated?

@dropoutandretireearly1781 5 месяцев назад

At 1:36 you said that you had negative cashflow for 13 years. Thats because you were never really into the house, the bank was so they made all of the money in interest. If you ever want to make really large cashflow do it Dave Ramseys way 100% debt free. I always like your videos though. I always think its funny when people over leverage and expect stellar cashflow results. I have to beat up on myself also, I used to over leverage and feed houses a few hundred a month also. Now that im 100% debt free on 5 rents and my primary also ITS HEAVEN !!!! LOL !!!!

@YankeeDoodleDandy 2 месяца назад

A lot of people clearly don't take into consideration time value of money when they do their analysis.

@ravick4u 2 года назад

Great video. I would like to ask about depreciation, do I have to take the depreciation when I file my taxes? What if I do not take depreciation?

@CoachChadCarson 2 года назад

thanks for watching. My understanding (as a non CPA!) is that you don't HAVE to claim it on your tax return. But when you go to sell the property, you WILL have to pay depreciation recapture tax AS IF you claimed depreciation earlier. So, you'd be crazy not to claim depreciation now and at least get some tax savings on the front end since you'll have to pay later (unless you do 1031 exchanges or die. Only ways I know to avoid it!)

@ravick4u 2 года назад

@@CoachChadCarson thanks a lot for explanation. Do you have a video on 1031?

@shorts_luv7634 Год назад

Gosh my father and I have paid 60,000 in taxes.we sold 3 rental properties.I sold 4 th property and probably owe another 20;000 in 2023. My husband and file together.I did not make a gain with fourth property.how do I reduce what I owe …I understand the recapture depreciation.any advice to reduce .I did do some renovation .I had to repair and replace carpet and paint .I paid 12;000 in repairs and getting property ready to sell.

@victorjones1836 6 месяцев назад

So in this particular example understanding YOUR personal situation,out of the 18k& 10k (1/2 of the 36k for depreciation & 1/2 of capital gain) , you only had to pay “back” 4k?

@whatsitlike6392 2 месяца назад

If you add in all the repairs you did do you think you lost overall? I think the rentals I have I've only made money on appreciation. If I subtract repairs from rent it's probably break even or slightly ahead. Seems like once you do a roof all profit is gone.

@Nancy-sw3mr 10 месяцев назад

What kind of improvements are allowed in selling a rental

@seanwaters8886 Год назад

I would find it interesting, how much of the mortgage was paid down by your renters -- I would think that would be an additional gain, or perhaps it is not considered an additional gain? If renters were paying for 13 years, that would have paid down a significant amount toward the mortgage, no? (By the way, thank you for this lesson).

@misspimake4578 2 года назад

Helpful video, thank you. What happens if there is a capital loss? Would one still owe taxes on the sell of the rental property? In your situation, you say it wasn’t a good investment, but it also depends on how much you actually profited off the property, I would assume you paid down the loan quite a bit minus realtor/closing costs with having it for 13 years?

@CoachChadCarson 2 года назад

If you have a capital loss even after accounting for depreciation recapture, then no you wouldn't pay taxes. My deal wasn't best I have done. But it also wasn't bad. So you are right about that. We benefited from it

@misspimake4578 2 года назад

@@CoachChadCarson thank you! Would we still have to pay on the depreciation recapture regardless if there was a gain or loss? Also, we no longer have the closing documents when we bought our rental house 15 years ago. Can we give our CPA a ballpark number when we file our taxes?

@bgliveshow 2 года назад

Great video!! I was not aware of the depreciation recapture. Thank you for sharing! I’m still unclear on something and I can’t seem to find the answer to this anywhere. I’m closing on the sale of my rental property (condo) today. The Capital Gains taxable amount will be close to 80K. Aside from the 1031 exchange, which from what I understand has a 45 Day time limit to buy a new investment, what else can be done? I would eventually like to purchase a duplex, but not at the current prices. I also own an S-Corp. Should I pay off the mortgage on my home, which wouldn’t affect what I would still owe with capital gains. Any advice on how to deal with the whole Capital Gains issue would be greatly appreciated! Thanks!

@CoachChadCarson 2 года назад

1031 has 45 days to IDENTIFY a property (or properties) and 180 days to buy properties. And the best strategy, if possible, is line up and tie up a deal before you even sell your rental. Other than 1031 exchange you can owner finance to Defer some of gain. But yous till pay depreciation recapture. So not a lot of other options other than just pay the tax (which is historically still pretty low)

@fivestar000 Год назад

So you defer taxes when doing the 1031 exchange even on a rental property? Or 1031 is for personal

@johnmcguire6443 2 года назад

since you were buying and selling properties, couldn't you use a 1031 exchange?

@carlossiuv9701 Год назад

Thanks for the example. The only problem that I found was how to calculate the depreciation, really I do not understand how you got $36,500. Maybe my problem began when you use $150,000 as example. Maybe you can explain one more time how do you calculate the depreciation. thanks again.

@ROG956 Год назад

I didn’t understand that either. Was 36, 500 the total depreciation claimed after 13 years? Does depreciation increase yearly as home appraised value increases or is it fixed from purchase price?

@richvillacres2793 3 месяца назад

Were you able to depreciate this property each year because you have real estate professional status? Also, would the depreciation recapture still occur if this property was purchased in a self directed 401k or Roth 401k?

@CoachChadCarson 3 месяца назад

You can depreciate the property whether or not you have professional status. But professional status allows you to USE excess losses if your rental expenses (including depreciation) exceed all of your passive income losses. That never was an issue for us. We used all of our depreciation to offset other rental income (you don't need to be a professional status to do that). But some people - like a high-earner with a salary job or a house flipper who makes $500k/year - it could be beneficial to use those excess losses to offset their active income. You can only do that if you're a real estate professional or have a spouse who is a real estate professional. I'm not sure about the self-directed IRA depreciation question. That'd be a good question for a real estate tax specialist like John Hyre: www.taxreductionlawyer.com/?r_done=1

@billl3936 5 месяцев назад

What percentage of rental income do you set aside for repairs? How do you handle big items like roof replacement or HVAC replacement?

@CoachChadCarson 5 месяцев назад

Historically, repairs and capex (big roof and HVAC type repairs) have been 10% to 20% of my rent. But as for budgeting, I typically start by setting aside a reserve of $5k/property just as a rainy day type fund. As I grew I switched from $5k/property to about 3-6 months of expenses for all the rentals (ex: $20,000/mo expenses = $60k in reserve). Once those reserves are set up, I don't set anything else aside unless I deplete that fund. So, if I can pay for all repairs out of the rents that month I will. If not, I'll dip into the reserve and then replenish it with cash flow in future months until it gets back to that level. I'm sure there are different or better ways to do it, but that works for me.

@jayaagarwal1584 2 года назад

Hi Coach. Have a question. Depreciation Recapture. 27.5 years. When does this period start. Is it 27.5 years from the data of construction of the property. first time it was sold ? Lets say if I buy a 30 years old property today then will 27.5 years for me start from today or is it already over ?

@CoachChadCarson 2 года назад

Good question, Jaya. The 27.5 years begins when you put it into service- which for us with a rental property is when we rent it. So even if someone else depreciated it for 27.5 years before you bought it, your 27.5 begins anew.

@jayaagarwal1584 2 года назад

@@CoachChadCarson Thanks so much. I watch all of your content and have listned to almost all of your all podcasts with-in last 1 month or so. To me, you are genuine. You explain it in the simplest possible way.

@marjuhrene 2 года назад

Great video. Why not 1031 into another (bigger) property to defer the tax bill?

@CoachChadCarson 2 года назад

In this case 1031 wasn't worth the time and expense for us. With much bigger profits, however, we would likely do that.

@sargonoshana2324 Год назад

Too many rules, i paid $700 for 1031, i had to select up to 3 properties in 45 days and close on those selected up to 3 properties before 6 months. I made the selection easy, but couldn't close on them.

@marcietorrence5361 10 дней назад

If a 68 year old sells a vacation house, never rented it out, what is the percentage on the capital gains? How much depreciation is allowed?

@lilyeos5214 3 месяца назад

What if I turn rental property to personal use? How does tax work when it comes selling

@12reachpenny 2 года назад

Can I muddy the water a bit with my reality? Every rental I have has been purchased with 1031 exchange funds.Is there a formula or a couple changes to the spreadsheet I could make that would account for the 1031?

@CoachChadCarson 2 года назад

Penny, this is a good muddying of the waters! Lol. I need to evaluate that too, and we may need to add a couple of lines to the spreadsheet in order to carry forward the old basis from the prior property. In short, all the gains and depreciation recapture I talked about in this video would have to be accounted for on both properties- the one you currently own and the prior one(s) you exchanged it from.