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real estate investment taxes

Real Estate Investment Basics:    Capital Gains Tax

One of the big concerns of real estate investors is called Capital Gains Tax.    

When a property is purchased, the cost of the property plus expenses are called the 'basis' cost of the property.   

During the period of ownership, the basis can be adjusted up based on expenses incurred, like home improvements, or down due to claiming depreciation on income tax.   This adjustment is called the adjusted basis.  

Upon the subsequent sale of the property, if the net gain on the property exceeds the adjusted basis, Capital Gains taxes may be required on that gain amount, and can be handled in various ways.  Portions of the gain can be excluded from capital gains tax. A person's main residence may not require payment of capital gains taxes   The most central issue is whether or not the property was owned for the short term (1 year or less), or the long term (over 1 year).   

Short term capital gains are normally taxed at the normal income tax rate based upon your tax bracket, which is a higher amount than what is required for long term capital gains.   Long term capital gains are taxed at a rate between 8% and 20%.   

This page is meant to introduce the topic of capital gains taxes only, because people always ask about it.   For a complete understanding, visit the IRS website and read instructions for Schedule D, Capital Gains and Losses,

or consult a financial planner, tax advisor or CPA.

Example Ordinary and Capital Gains rates from 2014

   *** rates valid in 2014

High Value Real Estate Investments

$925,000
22072328 MLS ⋅ ACTIVE Status
Rare opportunity to purchase and renovate three buildings with twelve total units just minutes from Highway 55 in Arnold. Average rents in the area for 2 bedroom, 1.5 bathroom apartments exceed $1,100/m, but current rents across the occupied units average less than $800 per month. Potential to add a one bedroom apartment to the basements of each building. Option to finance with three conventional loans or one commercial loan. Sellers will consider offers for individual buildings. Please do not disturb tenants. Sold as-is. Additional information and photos available. Duplicate listing of the three separate buildings: MLS listings 22072324, 22072275, and 22072328.

25 Crosswinds Drive, Arnold
$2,100,000
22065361 MLS ⋅ ACTIVE Status
The Renaissance Apartments, located across from the Streets of St. Charles is the ideal location. Residents have dining, shopping and entertainment footsteps from their front door. Each occupant has a guaranteed parking spot with a guest parking spot included. Courtyard area to spend time outside. Perfect time to for this expanding St. Charles neighborhood. Note: addresses included- 1650 S 5th Street, 456 San Juan, 454 San Juan, 438 San Juan, 440 San Juan

1650 S 5th Street, St Charles
$1,499,000
22064551 MLS ⋅ ACTIVE Status
Ashby Heights Apartments is a 20-unit apartment complex property at 3225-33 Ashby Rd, in St. Louis, Missouri. Ashby Heights offers a tremendous value add opportunity with a proven cosmetic update plan. 6 of the 20 units have already been updated and are experiencing incredible demand from the rental market. Ashby Heights Apartments has an in place cap rate of 7.03% and once the cosmetic update plan has been completed, an 8.40% unlevered yield on cost ($1,499,000 purchase + $9,000 x 14 units = $1,625,000 total cost). The property offers abundant off-street parking (+/- 25 spaces). A new coin operated laundry room has been added to the basement to serve non-updated units while the renovation plan is executed. All units have central air conditioning and heat. The property has walk out basements that provide an option for an owner to offer storage to tenants for additional income.

3225 Ashby Road, St Ann
$1,595,000
22063509 MLS ⋅ ACTIVE Status
AMAZING VALUE-ADD OPPORTUNITY - 16 UNITS, 2 BUILDINGS IN THE PRINCETON HEIGHTS NEIGHBORHOOD OF ST. LOUIS, MO! This garden-style property features 14 one bedroom one baths and 2 two bedroom one bath apartments. Unit upgrades have recently been completed to all units including kitchen/bathroom remodeling and fresh paint. These upgrades provide immediate value-add opportunity through rent increases and utility charge-backs. Each building contains a basement with coin-operated laundry and storage units for tenants. The property is located at a highly-visible South City intersection surrounded by a vibrant business district brimming with local shops, eateries, cafes, restaurants, parks, and more. Very large units - 800 sf one bedrooms and 900 sf two bedrooms offer a chance for owner to raise rents to the avg $1.31 per sf for surrounding neighborhood. New leases for $950 (1BR/1BA) and $1025 (2BR/1BA) starting in October giving new owner proof-of-proforma rents!

6265 Gravois Avenue, St Louis
$1,700,000
22041150 MLS ⋅ ACTIVE Status
24- 2 bedroom and 11/2 bath townhomes, 100% occupied, 900 sq ft. located off St Charles Rock rd right behind the Breckenridge police station! Each unit has forced heat and central air, updated kitchens and baths, and newer thermal windows.

3510 Glentown, St Louis
$1,026,000
22031696 MLS ⋅ ACTIVE Status
DONT DISTURB THE TENANTS. This is your chance to own 38 units in St Louis.

5928 Plymouth Avenue, St Louis
$1,100,000
22013332 MLS ⋅ ACTIVE Status
This 13.87 acre residential lot is the perfect opportunity for a new development site located in North County in St. Louis, MO. The site consists of 3 parcels totaling 13.87 acres. Zoned as (R-3) residential, the site lends itself well to a new single-family subdivision. The site is mostly level with all utilities stubbed in at the site. With a 600' of frontage on Parker Road.

1930 Parker, St Louis
$1,139,486
22011275 MLS ⋅ ACTIVE Status
PRIME vacant land, Zoned Commercial. This 2.59+/- acres is in a GREAT location in growing Wentzville, near Hwy 70! A new QT is currently under contract directly across the lot, sitting on Hwy Z and Interstate Drive corner. NEW homes being built nearby! DON'T MISS this PRIME opportunity for your business in a PRIME spot! (Additional 21+/- acres adjacent to this lot is for sale as well.)

Hwy Z & Interstate Drive, Wentzville
$1,650,000
22010877 MLS ⋅ ACTIVE Status
Rare offering of 7.52 acres of land in Olivette on one of the few undeveloped properties in the area. In Opportunity Zone. Excellent location off Olive Blvd with easy access from I-170. Zoned light industrial. Residential and commercial possibilities in Ladue School District.

1290 Dielman Road, St Louis
$3,999,000
22009617 MLS ⋅ ACTIVE Status
Development Opportunity! This 59+ acre beautiful parcel of land is now available! Located right off of Telegraph Road, this acreage is near newer residential developments in Oakville. The land is level to sloping towards the rear. This sale includes two parcels, 34K-22-0102 & 34K-31-0078.

7347 Telegraph Road, St Louis