Burt M. Polson | Napa Valley and Vallejo's Commercial Real Estate Broker

Guiding you through the real estate part of your life™

Commercial • Luxury Estates • Vineyards • Wineries • Land

Sales • Leasing • Consulting • Management

Napa Valley & Vallejo, California

Investment Property Taxation

In a nutshell, here is what you could expect to pay in taxes on the sale of an investment property. Please keep in mind that taxes could be delayed if a seller elected an 1031 tax-deferred exchange. Also, I am not a tax advisor nor claim to be one so please be sure to consult your tax advisor or CPA as each taxpayer's circumstances could be different.

Investment Property Held <1 Year

  • Interest is deducted as a business expense
  • Ordinary income tax is paid:
    • 28% Federal
    • 9% State
    • Self Employment Tax of 13% is paid for those who are "dealers", that is buying and selling on an on-going regular basis - somewhat vague in tax code.
    • Total taxation is 50%

Investment Property Held >1 Year

  • Interest is deducted as a business expense
  • Capital gains tax is paid:
    • 15% Federal
    • 9% State
    • No Self-Employment Tax imposed
    • 25% depreciation recapture

An ACRES Real Estate Services, Inc. Company