Selling Investment Property Denver
If you are selling investment property Denver, we at Denver Property Flip Real Estate Investment Company specialize in buying investment property fast in Denver and pay for it in cash. We understand the pain that financial institutions and real estate agents can pose, which is why we strive to deliver the best services when it comes to selling investment property fast in Denver.
There can be plenty of reasons one might consider selling investment property Denver, but regardless of the reason, it’s paramount that you understand all the tax implications involved when selling rental property in Denver. Be sure that before you make the final decision to sell investment property in Denver that it’s exactly what you want because dealing with tax issues can be both costly and very sophisticated, especially for the average homeowner.
Tax implications of selling investment property in Denver
The first things you will need to know about tax implications when selling rental property in Denver are the capital gains and losses, which are actually what tax implications are all about. The difference between adjusted basis and the sale price of the property will determine the capital gains or losses, something that a rental property tax calculator can be of great help, but this tool won’t answer all your questions.
Sometimes you may buy rental property and after a few months, you discover that it’s not the perfect investment for you. If you sell it within the same year of purchase, this will be considered as short term and thus the profit made will be taxed as short term capital gains. If you’ve owned a property for more than a year and sell it for a profit, it will be considered as long term capital gains when being taxed.
Selling rental property Denver tax expenses usually determine the basis of the property in question. If anything, this is the total cost of the property plus additional expenses incurred to improve the status of the property or changes aimed at making it last longer than you found it. In case any events occurred and led to a decrement in the value of the rental property, you can similarly decrease the basis amount. If the changes made improved the property, you also have the option to add the cost of these changes to the basis amount of the property.
Tax deductions to expect when selling investment property in Denver
When selling investment property Denver, you also need to know the possible tax deductions involved. Note that your regular tax deductions will still be in place as long as you have not sold the property. In case you don’t make any profit from selling the property, you will end up in a capital loss situation, which means you’ll be limited as to the amount of money to deduct for the loss you made, but you will still be able to carry the loss forward for some years.
If you qualify for passive losses, they could be included in your selling investment property tax reductions. A passive loss occurs when your rental property losses for a given year are more than the rental income generated by this investment property. Even though there is a cap as to how much you can claim annually, these losses can also be carried forward and when you sell your property, it’s possible to apply any of these unused losses during a given year.
Another great channel to take is to sell your investment property and buy another in the same investment category, but it’s essential to seek professional advice before moving in this direction. Although you have the option to sell your investment property in Denver and use the money to pay your primary residence mortgage, this channel can result in some substantial tax liabilities.
To avoid becoming a victim of the IRS when selling your investment property in Denver, it’s paramount that you do a significant research on your tax obligations and consequences. You need to familiarize yourself with all the necessary tax laws before you commission the sale of investment property Denver in order to stay off any mistakes. If you can’t do this on your own, it’s necessary that you hire a professional to assist you with all the details.
If you are interested in selling investment property Denver, do feel free to give us a call at (720) 370-9595. At Denver Property Flip, we buy houses in Denver and its environs regardless of their condition and pay in cash after just 5 days. Give us a call today and you’ll have an all-cash offer to consider in less than 48 hours.