Real Estate Calculators - Sale Of (Part Primary Residence) / (Part Renta/) Property

Percent Residential Non Rental Property - Percent of the property you occupy as your primary residence. As an example if you own a four family home and occupy one of the units while renting out the other three units, then 1/4 or 25% of the building might be considered residential owner occupied property while the other 3/4 or 75% might be considered rental property. There may be alternative methods for determining this breakdown, such as by square footage rather than by dwelling units. You should determine this with your tax specialist.

Current Value - This is the market value, the appraisal value or the estimated price the property would sell for in market.

Purchase Price - This is the price the property was purchased for and is used to establish a basis for the property.

Rehab Costs - If there were any major improvements that could be added to the basis such as rehab costs then you should add this to your rehab costs. It is up to you to determine whether the improvements are allowable additions to your property basis based on IRS code.

Mortgage Balance (First) - This is the remaining outstanding balance on your first mortgage. 

Mortgage Balance (Second) - This is the remaining outstanding balance on your second mortgage. 

Federal Capital Gains Tax - This figure is used to determine the amount of federal taxes due as a percentage of any gain on the sale of the property after any allowable tax exclusion. 

State Capital Gains Tax - This figure is used to determine the amount of state taxes due as a percentage of any gain on the sale of the property after any allowable tax exclusion.

Ordinary Income Tax - This would be an estimate of your ordinary income tax rate.  

Will you qualify for the $250,000/$500,000 capital gains tax exclusion? - This should indicate whether you qualify for an exclusion on any gain you have on the sale of the property. If you indicate that you qualify for the federal exclusion, this model assumes that 1) your state allows for the exclusion and 2) you would be eligible for the state exclusion as well. 

How much of an exclusion will you get? - In summary the IRS allows an exclusion of up to $250,000 for single individuals and $500,000 for married couples filing jointly on the sale of a principle residence subject to certain requirements. The exclusion can usually be claimed only once every two years. In order to qualify you must have owned and lived in the residence (as your primary residence) for two of the last five years before the sale. The tax law provides for an exemption of the two year rules for use and ownership, when the primary reason for the sale is health, change in place of employment, or “unforeseen circumstance” as defined or determined by IRS regulation. It is recommended that you read the tax code and speak with a tax specialist.

Depreciation Recapture Federal Tax Rate - This figure is used to determine the amount of federal taxes due as a percentage of any depreciation recaptured on the sale of the property. It is up to you to determine the tax rate that would apply to you. 

Any Prior Year Carryforward Losses - This figure is used to either offset any subsequent years profit or to offset any taxes due from a gain on the sale of the property at a later date.

Accumulated Depreciation - This would be the depreciation that was taken on the property in any of the previous years up to and including through the time of sale. Depreciation must be recaptured and taxed at the federal, state and sometimes the local level. In most instances the federal depreciation recapture tax rate is 25% and the depreciation recapture is taxed at the state and local level using your state and local ordinary income tax rates.

Real Estate Commission - This is the real estate commission that you anticipate paying.

NII Tax (Net Investment Income Tax) - This a federal tax and is used to determine the amount of federal taxes as a result of the Federal Net Investment Income Tax (NII).  The federal NII tax rate is typically 3.85% and is applied to any gain after any allowable exclusion.  This is a very complicated tax and there are certain income thresholds that may apply so it would be advisable to speak to a tax specialist.

Transfer Tax - This figure is the state and local transfer tax and is applied to the current value of the property.