Do Real Estate Investing Corporations Pay Capital Gains?
One of the most important aspects to understand when investing in real estate is the capital gain tax for investment property. Investing in real estate rental properties can produce returns just like stocks, bonds and other investments. While the method of investing may change, the one thing that never changes is the tax liabilities that come with the sale of an asset.
The IRS mandates that capital gains be levied when an asset sale is reported. Rental property owners that have created corporations must be aware of the tax liabilities that come with selling rental properties.
The sale of every property is unique and your tax calculations are best completed by a CPA or tax professional. A costly mistake in reporting a gain on the sale of your asset may result in penalties from unreported income. The IRS specifies different handling for the sale of personal property compared to rental property. Knowing whether you have a personal gain or loss will determine if your corporation must pay capital gains tax during your tax filing period.
IRS Capital Gains Tax Rules
When Rental Properties are Considered a 1231 Transaction
• Property is Held for More Than One Year
• Property is Used in Trade or Business
• Gains are Recognized During Ownership
• Depreciation Has Been Reported
It is likely that your rental property will be considered a 1231 transaction that will define it as a capital gain or loss when reporting the sale during a taxable year.
How to Calculate Your Capital Gains or Losses
This illustration should be used as a guide and is not a substitute for tax advice
Example of the sale of a corporate owned rental property held for one year:
Selling Price: $100,000
Selling Expenses: $2500
(Selling Price – Expenses = Net Amount of Sale)
Net Amount of Sale: $97,500
Purchase Price: $89,500
Annual Depreciation: $5000
(Purchase Price – Depreciation = Adjusted Basis)
Adjusted Basis: $84,500
(Net Amount of Sale – Adjusted Basis = Net Gain or Loss)
Net Gain: $13,000
Capital Gains Tax Rates for 2025
If you have realized a net gain from selling an investment property, the amount of capital gains tax you pay depends on your annual income and how long you held the property before selling.
Current Long-Term Capital Gains Tax Rates (2025)
For assets held more than one year, the following rates apply:
| Tax Rate | Single Filers | Married Filing Jointly | Married Filing Separately | Head of Household |
| 0% | $0 to $48,350 | $0 to $96,700 | $0 to $48,350 | $0 to $64,750 |
| 15% | $48,351 to $533,400 | $96,701 to $600,050 | $48,351 to $300,000 | $64,751 to $566,700 |
| 20% | Over $533,401 | Over $600,051 | Over $300,001 | Over $566,701 |
Short-Term Capital Gains, for assets held one year or less, are taxed as ordinary income based on your federal income tax bracket.
Corporate Capital Gains Tax (2025)
Unlike individuals, corporations do not receive a preferential tax rate for long-term capital gains. All capital gains for corporations are taxed at the flat corporate income tax rate of 21%. However, businesses can offset losses against gains to reduce taxable income.
One of the disadvantages of owning investment property as a corporation is paying state and federal taxes that are not applicable to individual taxpayers or low income earners that file annual tax returns.
State-Level Capital Gains Taxes
State taxes also apply to capital gains, and these vary depending on where the property is located. For example, Florida does not have a state capital gains tax, making it an attractive option for real estate investors.
Capital Gains Tax Implications for Real Estate Investors
One of the disadvantages of owning investment property as a corporation is the requirement to pay both state and federal taxes. However, investors can utilize tax strategies such as 1031 exchanges to defer capital gains taxes when reinvesting in similar properties.
If you’re interested in minimizing your capital gains tax on rental property or learning how to structure your investments efficiently, call us today for a consultation!
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What is Capital Gain Tax for Investment Property?
At JWB Real Estate Capital, we’ve spent the last 19 years helping people like you achieve their financial goals through smart property investments. One of the most important aspects to understand when investing in real estate is the capital gain tax for investment property. This tax applies when you sell a real estate investment for a profit. Essentially, capital gain tax for investment property is a tax on the profit you make from selling an asset, in this case, a property, that you bought to generate income or appreciation. Many of our clients have questions about the difference between capital gain tax on rental property and other real estate taxes. While there are several tax considerations when owning investment properties, the capital gain tax for investment property specifically relates to the profit realized upon sale. Unlike property taxes, which are paid regularly based on the property’s assessed value. Understanding this distinction is crucial for maximizing returns. As experienced professionals, we know that navigating the complexities of capital gain tax for investment property can be daunting. That’s why we’re committed to guiding our clients through every step of the investment process. Informed investors make the best decisions, and we will help you understand how capital gain tax for investment property applies to your unique situation. Knowing how these taxes work can significantly impact your overall profitability. We also want to stress why is investing important aspect of this discussion. Building wealth through real estate is a long-term strategy, and understanding taxes is a big part.
How Capital Gains Taxes Work: A Guide for Real Estate Investors
Understanding how capital gain tax for investment property works is fundamental to your success as a real estate investor. At JWB Real Estate Capital, we believe in empowering our clients with knowledge. Simply put, the tax is calculated on the profit, or “gain,” from selling your real estate investments. This profit is determined by subtracting the adjusted cost basis from the selling price. The adjusted cost basis includes the original purchase price, any improvements made, and any depreciation claimed. We help our clients find turnkey homes for rent that are for sale and understand how this impacts their taxes. It’s also important to distinguish between short-term and long-term capital gains, as the tax rates differ significantly. Many investors secure a loan for real estate investment, and we can advise you on how to consider this in your planning. We also get asked about property investments in general.
Tax-Saving Strategies: Minimizing Capital Gain Tax for Investment Property
At JWB Real Estate Capital, we’re dedicated to helping you maximize your returns and minimize your tax burden. One of the most effective strategies for deferring capital gain tax for investment property is the 1031 exchange. This allows you to reinvest the proceeds from selling one property into a “like-kind” property, effectively deferring the tax payment. Many clients ask us how to find a real estate investor or how to get investors for real estate, and our network can be a valuable asset. Our expertise in property management in Jacksonville also plays a crucial role in ensuring your investments remain compliant and tax-efficient. We do not offer or sell any buying vacation home properties. This helps you stay informed and make smart decisions.
Consistent, Reliable Returns
Since 2011, JWB has delivered over $305 million in total profits to its investor community.
Unmatched Growth
JWB clients have experienced 77% more home price appreciation from 2013-2023 compared to the average Jacksonville investor.
Dependable Results
With over 1,200 homes rented annually on 2 to 3-year leases, JWB maintains a 75%+ lease renewal rate and an average resident stay of 4.5 years, ensuring stable and consistent returns.
Depreciation Recapture: The Hidden Factor in Capital Gains Taxes
A key aspect of owning capital gain tax for rental property is understanding depreciation recapture. Over the years, as a landlord, you can deduct the depreciation of your rental property. This means you can deduct a portion of the property’s cost each year, reflecting its wear and tear. This reduces your taxable income, which is great. Still, it also impacts your capital gain tax for investment property when you sell.
Depreciation lowers your property’s adjusted cost basis. So, when you sell, the portion of your gain attributed to depreciation is taxed at a different rate, typically 25%, known as the depreciation recapture tax. It’s a way for the IRS to “recapture” the tax benefits you received through depreciation deductions.
We often provide a rental estimate to help our clients understand their potential returns and tax implications. This includes factoring in depreciation. While we focus on turnkey homes for rent that are for sale, we remind clients that these properties often come with careful planning to minimize these tax surprises. With us, the focus is on your investment returns. Part of that is ensuring you are aware of all tax implications.
Many new investors are unaware of depreciation recapture, which can be a significant factor in the overall profitability of your investment. At JWB Real Estate Capital, we ensure you understand how depreciation recapture works.
Working with JWB Real Estate Capital: Your Partner in Tax-Optimized Real Estate Investments
For 19 years, JWB Real Estate Capital has been the trusted partner for investors seeking to maximize returns in the Jacksonville market. Our comprehensive approach to real estate investments sets us apart. We offer a vertically integrated system with expert property selection, thorough rental estimate analysis, and professional property management. We guide you through buying real estate, securing a loan for real estate investment, and managing your property for optimal performance. We also understand that many investors are looking for how to find a real estate investor to partner with or are interested in how to get investors for real estate themselves. While we don’t offer to find investors for your deal, we will help you understand the market and find profitable properties. Our property management fees are 10% on average.
Why Jacksonville is the Best Market for Property Investments
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Make Smart Investments with JWB Real Estate Capital
For 19 years, JWB Real Estate Capital has helped investors like you build wealth through strategic real estate investments. Understanding capital gain tax for investment property is crucial to maximizing your returns. Informed investors make the best decisions. That’s why is investing important: to achieve long-term financial goals. Our team provides comprehensive support, from selecting the right properties to managing them efficiently with our property management Jacksonville services. While we don’t assist in finding investors, we empower you with the knowledge and resources to make sound investment choices, understand the complexities of capital gain tax on rental property, and secure your financial future. Let us be your partner in navigating the Jacksonville real estate market. We want to help you reach your goals. Call us for a consultation.
Why JWB?
Consistent, High Returns
Our vertically-integrated approach has helped clients achieve an average of over 20% annualized rate of return.
Vertical Integration
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Invested in Your Success
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FAQs: Your Questions About Capital Gain Tax for Investment Property Answered
At JWB Real Estate Capital, we understand you have questions about capital gain tax for investment property. Let’s address some common inquiries.
What’s the difference between short-term and long-term capital gain tax on rental property?
The holding period determines this: under a year is short-term, and over a year is long-term, with different tax rates.
Why is investing important?
Investing in real estate can provide long-term financial security and wealth growth.
How does buying real estate as an investment impact my taxes?
Buying real estate as an investment has several tax implications, including property taxes, deductions for mortgage interest and depreciation, and ultimately, capital gain tax for investment property when you sell. We’re here to provide clarity and guidance on topics like adjusted cost basis, depreciation recapture, and 1031 exchanges.
How does a loan for real estate investment affect my taxes?
While mortgage interest can be deductible, the loan doesn’t directly impact your capital gains tax.
What are the benefits of using property management Jacksonville services?
Professional management can ensure proper tax record-keeping, saving you money and headaches. Our property management Jacksonville team is here to help.
Do you deal with buying vacation home properties?
We don’t deal with buying vacation home properties. We focus on long-term property investments and turnkey homes for rent that are for sale. We are here to help you understand these aspects of real estate taxation and make informed decisions. We will also be able to provide you with a rental estimate for your property.