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Tax Planning Questions

Selling a Long-Held California Rental: Questions to Ask Before You Decide

Decades of ownership create both opportunity and complexity. These are the questions worth answering first.

What is the property actually worth today, based on real comparable evidence rather than a portal estimate? What does it produce after vacancy, taxes, insurance, maintenance, management and the repairs you've been postponing?

What is your CPA-confirmed adjusted basis? For a long-held property this is rarely the purchase price. Capital improvements increase it. Depreciation claimed or allowable reduces it. Prior deferred gain from an earlier exchange reduces it further.

What tax rates would actually apply to you in the year of sale — federal long-term capital gain treatment, unrecaptured Section 1250 treatment on depreciation, the Net Investment Income Tax if applicable, and your California marginal rate? California generally taxes capital gain as ordinary income at your marginal rate, so there's no single flat number to plug in.

How is title held, and does the ownership structure match what your exchange or estate plan requires? Preliminary title, trusts, LLCs, and multiple owners all need review before listing rather than during escrow.

Finally: what do you want this asset to accomplish in the next chapter? Income, simplicity, growth, diversification, or something easier for your family to inherit? The tax answer follows the goal, not the other way around.

Important: These calculations are for general educational and planning purposes only. They aren't an appraisal, tax calculation, legal opinion, investment recommendation or guarantee of results. Tax basis, depreciation, exchange eligibility and tax consequences can vary substantially based on individual facts. Review your specific situation with your CPA, attorney, qualified intermediary and other appropriate professionals before acting.

Questions about how this applies to your property?