Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.
Do you own a rental property where you have “used up” most or all of your depreciation? You want to sell the old property and buy a new one so you can start benefiting from the depreciation deduction again. You’re thinking: Can I do that? Answer: Absolutely!
Here are 3 tax strategies that you can use:
- Take advantage of the suspended rental losses – if your income is more than $150K, the IRS will suspend your current rental losses and will be carried over to future tax years indefinitely (exception applies for RE professional). Any carried-over rental losses not used can be claimed if your income will permit or fully expensed during the year you sell the property to offset potential capital gains.
- Key Tax rate – if you are in the 10%-15% tax bracket and you held the rental for more than a year, then you can pay “0” capital gains rate. Yes! You heard that right…zero! The key here is proactive planning. Make sure you postpone some income and increase your deductions in order to be in 10%-15% tax rate.
- Installment sale – you can spread and report the capital gains over a number of years in order to spread the tax and create a future revenue stream.
To recap, take advantage of the strategies above so you can minimize or spread your taxes and start getting the tax benefits from depreciation deduction again.
All these tax laws represent summarized concepts and cannot be implemented without fuller understanding of your exact situation. For further information and assistance, please contact:
Noel Dalmacio, CPA, CFP, MS Tax Telephone no: (949) 336-1345
Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.