Mortgage Balance $1,000,000
Year Purchased 2000
Sales Price $4,000,000
Selling Expenses $40,000
Total Selling Expenses $240,000
Net Sales Proceeds $3,760,000
Cost Basis $250000
Cost of Improvements $100000
Depreciation $133,636
Net Adjusted Basis $216,364
Taxable Gain $3,543,636
Homeowner’s Exclusion
Total Subject to Tax $3,543,636
Depreciation Residential Commercial
Cost Basis $250000 $250000
Depreciable Amt (70%) $175,000 $175,000
Annual Depreciation $6,364 $6,410
Year of Purchase $2000 $2000
Years Owned 21 19
Depreciation taken to date $133,636 $120,909
Federal Tax Calculation Value
Taxable Gain $3,543,636
Tax Rate 20% (0.20) 0.2
Federal Cap Gains Due $708,727
State Tax Calculation Value
Net Sales Proceeds $3,760,000
Net Adjusted Basis $216,364
Taxable Gain $3,543,636
Homeowners Exclusion
Taxable Gain 3,543,636
CA 13.3% 0.133
State Tax Due $471,304
Net Investment Income Tax Value
Taxable Gain $3,543,636
200,000 OR 250,000 200,000
Taxable Amount $3,343,636
Tax Rate 0.038
Total $127,058
Debt over basis tax? Value
Existing Mortgage minus Adj. Basis $750,000
Possible additional tax $147,000
Total Tax Bill 1,460,771
Projected Tax Bill Value
Federal $708,727
State $471,304
NIIT $127,058
Depreciation Recapture 25% $6,682
Total Tax Bill $1,313,771
% of Profit to Taxes