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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

$2,000,000
23017086 MLS ⋅ ACTIVE Status
Renovated, occupied and ready for new ownership. Summer 2023 is the perfect time to push the rental rates to $1100 a month! Renovations include new kitchen cabinets, quartz counters, stainless appliances and flooring! New bathrooms with subway tile, flooring, vanity, lighting and more! Complimentary laundry in the basement. Private gated parking lot. This property is surrounded by MILLIONS of dollars of great real estate! Walking distance to the new Fields Grocery Store!

5531 Pershing, St Louis
$3,195,000
23017012 MLS ⋅ ACTIVE Status
Turn key, renovated, and ready for a new for new ownership. 5086-5092 Waterman offers 28 one bedroom/one baths units. Market rents for 2023-2024 should be $1100 a month. Keyless entry on all units. Renovated kitchens with stainless appliances, quarts counters, and flooring. Great location for Washington University and Barnes Hospital students/employees.

5092 Waterman, St Louis
$2,995,000
23009389 MLS ⋅ ACTIVE Status
Amazing location on the corrner Tower Grove and Shaw. 13 2 bd 1 bath units and 4 1bd 1 baths. Exposed brick, hardwood floors, great natural light. Renovations include new custom kitchens with stainless appliances and quartz counters. Updated bathrooms with new showers, vanitys, flooring and fixtures. Ample off street parking for both tenants and guests. Complamentry laundry and storage lockers in the basement. NEW TPO roofs, some new hot water heaters, furnaces, and ac units.

4262 Shaw, St Louis
$6,100,000
23006654 MLS ⋅ ACTIVE Status
One Loop Apartments includes 59 fully renovated apartments, conveniently located a half mile from Washington University's North Campus, and the Delmar Loop. There are 5 total buildings in the complex which have 9 (1) bed units, 13 (2) bed units, and 37 (3) bed units. 146 total bedrooms in the complex. The entire complex is fully renovated – with the last two units currently being completed. The complex is 96% full including 4 pending tenants scheduled to move in. The seller plans to sell the property with all of the apartments completed with 96%+ in occupancy. There is potential to raise the rents to the market rents for a good portion of the units, which could generate an additional $40,000+ annually in revenue. Priced at a 7.99% cap rate. With renovation completed the complex is similar to being new construction, which will keep maintenance and turnover costs low. All electric building. Laundry facility and playground was added. Includes secure gated parking with 76 parking spots.

1135 Hodiamont Avenue, St Louis
$900,000
22078444 MLS ⋅ ACTIVE Status
The Bellevue Heights Apartments in Maplewood, is a 13 unit complex just one block North of Manchester Avenue, home to all the amazing restaurants, bars, breweries, local shops and entertainment options that Maplewood is known for. Many locals agree that Maplewood is the most walkable neighborhood in all of St. Louis. The property consists of 12 studio units and one, 1 bed / 1 bath unit. In place rents are significantly below market and provide new owners the opportunity raise rents immediately. With cosmetic updates, market rents for studios are upwards of $900/unit and $1,000+/unit for 1 beds.

2526 Bellevue Avenue, St Louis
$950,000
22031696 MLS ⋅ ACTIVE Status
DONT DISTURB THE TENANTS. This is your chance to own 38 units in St Louis.

5928 Plymouth Avenue, St Louis
$1,139,486
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