Free · Nonprofit · Education only

Understanding Your Big Sale Taxes

Selling a rental, a business, land or a large stock position? The tax bill is usually bigger than people expect, and three things drive it: depreciation recapture, everything that has quietly lowered your cost basis, and how your mortgage and any cash-out refinance count at closing.

One free hour on Zoom that walks through all three, then compares the legal ways to pay, defer or shrink the tax: 1031 exchange, Delaware Statutory Trust, Section 453 installment sale and charitable remainder trust.

Next class: Big sales and taxes: how to close the deal. Thursday, October 22, 2026 · 4:00 to 5:00 PM PT / 7:00 PM ET · Online (Zoom) · Sponsored by the Retirement Literacy Foundation, a 501(c)(3). No products, no pitch.

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Why the bill is bigger than expected

The three numbers that raise the tax on a sale

Most sellers know their sale price. Far fewer know their adjusted basis, how much depreciation will be recaptured, or what their loan does at closing. These three decide the tax.

  1. Depreciation recapture. Every year of depreciation on a rental or business property is deducted from your basis, whether you claimed it or not ("allowed or allowable"). When you sell, that part of the gain comes back: up to 25% as unrecaptured Section 1250 gain on buildings, and at ordinary income rates on equipment and other Section 1245 property, which includes items pulled out by a cost segregation study. Inside an installment sale, the ordinary-income part (Section 1245, including cost-segregation items) is still taxed in the year of sale; the 25% unrecaptured Section 1250 gain is spread over the payments with the rest of the gain.
  2. What lowers your basis. Your basis is not just what you paid. It goes down with depreciation, with basis carried over from an earlier 1031 exchange, with casualty losses and insurance reimbursements, and with certain credits and deductions taken on the property. It goes up with capital improvements you can document, and with purchase and sale costs. A lower basis means a larger gain, and a larger tax.
  3. How debt affects the tax. Paying off the mortgage at closing does not reduce the tax: the loan the buyer takes over or you pay off counts as part of what you received. If you did a cash-out refinance, your loan can be larger than your adjusted basis, and the tax can be more than the cash you walk away with. In a 1031 exchange, debt paid off and not replaced is taxable "mortgage boot". In an installment sale, a mortgage above your basis is treated as a payment in the year of sale.

What the hour covers

The five ways the tax on a big sale gets paid, deferred or shrunk

Every strategy people hear about at a cocktail party fits in one of these buckets. We walk through the rules for each, who they actually work for, and the questions to ask before you sign anything.

  1. Pay it. Federal capital gains at 0%, 15% or 20%, plus the 3.8% net investment income tax, plus 25% depreciation recapture on real estate, plus your state (California 9.3% to 13.3%, nothing in Texas or Florida). What a $2 million gain really costs in 2026.
  2. Swap it: the 1031 exchange. Real estate only. 45 days to identify, 180 days to close, a qualified intermediary, and what happens to the tax when you die (the step-up). Why it does not work for a business sale.
  3. Swap it without becoming a landlord: the Delaware statutory trust. A 1031 into a fractional interest in institutional property. Income, liquidity limits, fees, and the questions the brochure does not answer.
  4. Spread it: the installment sale, Section 453. Seller financing and the structured installment sale, where the buyer pays cash but the seller is taxed as the money arrives. Works for businesses, land, commercial property and even a primary residence. The 453A interest charge above $5 million and the difference from the "monetized installment sale" and "deferred sales trust" arrangements the IRS has flagged.
  5. Give part of it: the charitable remainder trust, and the other exits. CRTs, opportunity zones, QSBS for company stock, and the Section 121 exclusion on a home. Which ones are real for a typical seller and which only work at $10 million.
You leave with: a one-page worksheet that puts your own sale price, basis, depreciation and state on the five buckets side by side, so you can see the after-tax number for each before you talk to your CPA or attorney.

Who this is for

Anyone with a sale coming that will produce a six- or seven-figure gain

Business owners

Selling a company, a dental, medical, veterinary or CPA practice, an agency or a franchise. Asset sale vs stock sale, goodwill, the earn-out, and why the closing date decides the tax year.

Landlords and property owners

Rental houses, apartments, commercial buildings, land, farms. Depreciation recapture is the number that surprises people; the 1031 clock is the one they miss.

Homeowners with a big gain

Sold or selling a long-held California home well past the $250,000 / $500,000 exclusion. What is left over is taxed, and there are more choices than "pay it."

Anyone holding one big stock position

Company stock, an inheritance, a lucky pick. Exchange funds, QSBS, and gifting strategies, and when a plain sale in a low-income year is the right answer.

The rules of the room

Education only. Nothing is sold, no one is pitched.

The Retirement Literacy Foundation is a 501(c)(3). The workshop explains how the tax code treats a sale so that you can have a smarter conversation with your own CPA, attorney or advisor. We do not recommend products, we do not take a fee, and we do not share your information. Bring your questions, bring your spouse, bring your numbers if you want them run live.

Presenter: Hans Goldstein, EA, Retirement Literacy Foundation. Admitted to practice before the IRS. This is general education, not tax, legal or investment advice. Every sale is different; verify anything you plan to act on with a qualified professional.

Audit trail

Sources and review

Reviewed for the Retirement Literacy Foundation, a 501(c)(3) education nonprofit. Prepared by Hans Goldstein, EA, retirement educator. Informational only. Not tax, legal or investment advice. Every figure below cites its source so your CPA or attorney can check it.

Figures are 2026 federal amounts and 2025 California rates unless stated. Examples are illustrative, rounded, and assume no other income; your numbers will differ. Last reviewed September 21, 2026.

Reserve a Free Seat

Live on Zoom, Thursday, October 22, 2026, 4:00 PM PT / 7:00 PM ET. Big sales and taxes: how to close the deal. 60 minutes plus questions. Free, nonprofit, nothing sold.

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Hans Goldstein is an Enrolled Agent, admitted to practice before the Internal Revenue Service. Not affiliated with or endorsed by the IRS.