Real-estate sales can involve basis reconstruction, improvements, depreciation recapture, residence exclusions, inherited basis, installment sales, and state tax. The details of how the property was used matter.
Establish basis before closing if possible
Purchase records, improvements, settlement statements, depreciation schedules, and inheritance records can materially change taxable gain.
Identify the property’s tax history
A former residence converted to rental, or a rental later used personally, may require more nuanced analysis.
Ask about depreciation recapture
Depreciation claimed or allowable on rental or business property can affect the character of gain.
Ask about planning alternatives
Installment sales, 1031 exchanges for qualifying investment property, and charitable strategies may need evaluation before the sale is final.
Reviewed for accuracy · October 2026 · Editorial Standards · Sources & Authorities