CPA of Denver · Work directly with Philip M. Falco, CPA
Before selling a rental, gather the property’s tax history and request a projection. Sale proceeds and taxable gain are different figures. The estimate depends on adjusted basis, depreciation, selling expenses, ownership and the transaction terms.
Gather the Property’s Tax History
- Original purchase and acquisition closing records.
- Improvement costs and prior depreciation schedules.
- Prior returns and suspended-loss records.
- Personal-use or principal-residence history.
- The proposed contract, expected selling costs and closing date.
- Ownership details and any installment or exchange proposal.
Why the Mortgage Payoff Is Not Your Tax Basis
The loan balance affects cash received at closing. It does not determine the property’s adjusted tax basis. Reconstruct the acquisition, capital improvements and depreciation history rather than estimating gain from the check you expect to receive.
Review More Than the Headline Gain
Depreciation-related gain, loss limitations and the owner’s other income can affect the result. A property converted between personal and rental use may require additional analysis. Confirm federal and relevant state consequences before deciding how much of the proceeds to spend or reinvest.
Discuss Alternatives Before Signing or Closing
If an exchange, installment sale or ownership change is being considered, raise it early. Specialized rules and transaction steps can make advice after closing too late to accomplish the intended result. A consultation identifies the questions; a full transaction analysis and implementation are separately scoped.
Plan the Payment
A projection can help assess withholding or estimated-payment needs. Update it when the final terms change. Keep the closing statement and final expense records for preparation of the return.
Explore real-estate investor services, scenario planning and estimated tax planning.
Frequently Asked Questions
Is my cash at closing the same as taxable gain?
No. Loan payoffs affect the cash received, while the gain calculation uses sale proceeds, selling costs and adjusted tax basis.
Should I wait until the sale closes to ask about tax planning?
Contact us before committing when possible. Some transaction choices require steps before closing.
Choose Your Next Step
For a focused question, review the $350 CPA Consultation: up to one hour total for document review, preparation and the telephone call. Larger analyses and implementation require a separate engagement. For service-fit and pricing questions, send a brief inquiry; do not include sensitive financial records.
Official References
Updated October 17, 2026 · CPA of Denver. General information; the applicable tax year, facts and written engagement determine the work and advice provided.
Family Home Sales and Seller Financing
Planning a purchase or sale between relatives? Review family seller-financing tax planning before finalizing the agreement. Supporting guides cover interest-rate questions, installment reporting and below-market terms and gifts.
Download the Before You Sign checklist (PDF). Written recommendations and detailed calculations are separately quoted.