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The sale of property report calculates a sale in each year 1
through 10 based on the investor's capital gains rate, unrecapture depreciation tax rate and the
assumptions supplied for appreciation. Before
and after-tax Sales Proceeds are calculated for each year. The
after-tax sales proceeds value shows your profit from the sale based
on the assumptions that were entered. To determine the investor's
after-tax sales proceeds five years into the future, you would look
at the year five data.
It is best to be conservative when estimating appreciation.
High past appreciation rates
don't guarantee high future appreciation rates. Over
estimating appreciation growth rates could greatly exaggerate
your future gain from the sale. You might want to enter low,
middle, and high estimates for appreciation. This will give
you a range of estimates for future sales proceeds. By using this approach,
your actual future after-tax sales proceeds value should fall within
the range.
Long term gains are profits from assets owned for more than one
year.
If you are in a
25 percent income tax bracket or higher, your long term gains
are taxed at 15 percent.
That portion of your gain attributable to
depreciation
is taxed
at a higher rate. Unrecapture depreciation taxes work like this. The total
of all depreciation taken on the building during the
period that you owned your income property plus all accumulated
depreciation taken on any improvements to the building are subject
to the following unrecapture depreciation tax rates when
you sell.
If you are in a 15
percent income tax
bracket or lower, a 15
percent unrecapture depreciation tax rate is applied to gains attributable
to
depreciation. If you are in a 25 percent income tax bracket or
higher,
a 25
percent unrecapture depreciation tax rate is applied.
Any unamortized mortgage points not deducted on your yearly
income tax returns and any carryover rental income losses not
deducted can be taken when an income property is sold.
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Advantage Software LLC
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