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    montaguerich's Avatar
    montaguerich Posts: 1, Reputation: 1
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    #1

    Oct 2, 2011, 09:00 AM
    Holding mortgage sale of a rental property what % capatal gain will I pay
    Holding part of a mortgage on a sale of rental house. What % on capotal gains will I pay
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #2

    Oct 2, 2011, 09:11 AM
    Do you mean, you sold a house and you are holding the mortgage rather than the buyer going through a separate lender?

    If so, your cap gains is based on the sales price of the house. The fact that you took the mortgage has no bearing.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Oct 3, 2011, 12:43 PM
    Actually, the OP has NOt provided enough information for us to provide an answer.

    The capital gain percentage is based on the OP's overall financial circumstances. It should be either 5% or 15%, but I cannot say for sure until the OP gives us more specifics.
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
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    #4

    Oct 3, 2011, 12:47 PM
    Quote Originally Posted by AtlantaTaxExpert View Post
    Actually, the OP has NOt provided enough information for us to provide an answer.
    I agree, what he will pay in capital gains depends on his financial circumstances. But it's based on the sale price vs his cost basis, the fact that he took back a mortgage doesn't have a bearing.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #5

    Oct 3, 2011, 01:37 PM
    True, the second mortgage has NO bearing on the capital gains rate.

    But the actual gain realized from the sale is only one component of determing the rate of taxation.

    Example: He bought the house for $10K and sold it for $150K. More than likely, that $140K gain will be taxed at 15% regardless of his other income UNLESS he had offsetting capital losses.

    However, if he bought at 10K and sold for $15K, the $5,000 gain would be taxed at 5% if that was his only income source.
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