Capital Gains Part One

I love math, i believe that math is your friend :-).Gainon an income-prducing property is calculated much like that for a personal residence , with the exception of any depreciation that has been claimed over the years must be subtracted from the adjusted cost basis. Basically, what this means is that the dollar amount that has been deducted for depreciation over the time of property ownership must be subtracted from the cost basis to arrive at the adjusted cost basis. THe amount of taxable gain is then calucualted by subtracting the adjusted cost basis from the selling price. Unlike a primary residence where a certain amount of gain may be excluded from being taxed, taxes are owed on any profit made whenever income producing property is sold. But there are ways an investor may legally defer the gain to a later time. It is important to note that if an income property is sold at a loss , the loss may be deducted. Explaining capital gains in words is more difficult to understand than an actual mathematical example.