Real Estate & Rental Property Taxes
Property is often the largest number on a tax return, and the rules change at every step: renting it out, improving it, selling it or exchanging it. We prepare the returns and, more usefully, look at the tax before you sign, while there is still time to plan.
What's included
- Rental income and expenses (Schedule E), depreciation and passive loss rules
- Selling your home: the main-home exclusion of up to $250,000 of gain ($500,000 for most married couples filing jointly) when the ownership and use tests are met
- Selling a rental or investment property: capital gains and depreciation recapture, federal and California
- 1031 exchanges: the 45-day and 180-day deadlines and the reporting, including California Form 3840
- Cost segregation and bonus depreciation where they fit (California does not follow federal bonus depreciation)
- Owners who live in Korea: FIRPTA and California withholding when U.S. property is sold
This is for you if
- You rent out a house, condo or unit
- You are selling a home or a rental, or planning to buy the next one
- You live in Korea and own property in Los Angeles
Questions
I'm selling my house. Will I owe tax?
Often not on the first $250,000 of gain, or $500,000 for most married couples filing jointly, if you owned and lived in it as your main home for two of the last five years. Depreciation taken for a home office or rental use, and some other situations, can still be taxed. Bring the numbers before you list it.
What is a 1031 exchange?
A way to defer tax when you sell business or investment real estate and buy other real estate. You have 45 days to identify the replacement and generally 180 days to close, and the sale money usually goes through a qualified intermediary, not your account. Talk to us before the sale closes; it cannot be arranged afterwards.
Have a tax question?
Call the office or send a message, and we will get back to you as soon as we can.