A property that produces an annual NOI of $222,000 was purchased for $3,400,000 (all costs included). Debt service for the year was $170,769 (interest $141,621 & principal $29,148). Annual depreciation is $69,744. Assume you sell the property after 1 year of ownership for a gross price of $3,700,000. Assuming you pay closing costs (including commissions) of 4%, how much tax on the gain would be payable if capital gain rates are 15% and depreciation recapture rates are 25%? (Hint: Don't forget to account for closing costs.) Ch11
a. $ 99,338 b. $ 40,236 c. $ 21,962 d. $ 37,029