In Sept 1999 I sold a piece of property. I did a 1031 exchange for a new piece of property that cost 299000.00. My basis in that exchange was 29000.00.

In April 2006 I sold that piece of property. After closing costs and realtor costs the net profit was $512,000.00.

Improvement costs, repair costs and other additons to the property were not capitalized. but deducted each year as the cost of doing business. (It was a 8 plex rental property)

Our total depreciation was 22,000.00.

What will be the capital gains tax that is due on this sale? I live in Colorado.

When is the capital gains tax due?

Thank you.

I am curious as to how you depreciated $22K of $29K in basis over seven years. However, I digress!

It looks like your capital gains is about $505K (Net profit of $512K MINUS $29K basis PLUS $22K depreciation).

Capital gains rate is about 15%, so you must make an estinated tax payment of roughly $75,750 by June 15th, 2006 to the IRS.

If the property is located in Colorado, it looks like here is NO state tax on the capital gain. If not, you need to send about $25,000 to the state of Colorado by June 15th, 2006.

Good point on the depreciation - the taxpayer should make sure that depreciation was actually taken, and not scheduled to be taken over a period of many years.

Don't forget the $22k depreciation will be recaptured, which might push its tax rate above 15% (25% max, I think).

And don't forget state tax, for BOTH the state the property is located in and the state of residence of the taxpayer. We don't know they are the same state.

also, estimated tax payments may not be necessary if the taxpayer falls within the safe harbor provisions or his current withholding and/or estimated tax payements.