My wife and I sold a 4-unit rental property that we held for approximately 5 years. We had around a $200K gain on the sale. Our CPA estimates $51k federal tax and $8k Pennsylvania state tax, ouch!. This is capital gains, and depreciation recapture.
The CPA included a 3.8% Net Investment Income Tax on the capital gains. My wife is a full-time realtor and qualifies as a real estate professional for tax purposes. Everything that I have read lists that a real estate professional who is actively involved in the business and managing the property is excluded from the additional 3.8% NIIT.
There are a lot of smart people on here, so I figured you could point me in the right direction. Thanks!
