Tax Consequences of Property Transactions

Free CFP Exam lesson in Tax Planning. 21 min read, ~3,091 words.

Basis determines everything: cost, adjusted, carryover (gift), stepped-up (inheritance), or substituted (1031 exchange). Depreciation reduces basis even if the taxpayer never claimed it ("allowed or allowable"). Section 1245 recaptures depreciation on personal property as ordinary income; Section 1250 caps real property recapture at 25%. Section 1031 defers gain on real...