Legal Question in Real Estate Law in Florida
Capital Gains Tax
A friend in Florida is selling her rental duplex (not her residential home)and purchasing another real estate property in Florida, does she have to pay capital gains tax? She thinks she does not have to. She's 61 years of age.
3 Answers from Attorneys
Re: Capital Gains Tax
Your friend may want to meet with a real estate lawyer to learn whether a tax-free exchange or 1031 exchange where the tax liability is deferred is an option. Otherwise, based on the information provided, your friend may have a taxable gain when comparing the sales price to the purchase price (cost basis) adjusted for allowable depreciation. It is likely that a capital gain will result upon the sale of the property, but without learning all the facts, I cannot say for certain.
Re: Capital Gains Tax
As I understand your question, the answer is - yes. She owns the rental property which is a capital asset, it has appreciated - and that is the definition of a capital gain which will be realized when that property is sold. Therefore a capital gain tax must be paid.
Re: Capital Gains Tax
Unless she qualifies and plans the transaction as a tax-free exchange, she might have a taxable gain when she compares her sales price to her cost basis adjusted for deprec iation allowed or allowable. In many cases, unless the property has depreciated in value, a capital gain will result. Age has nothing to do with anything.