What should I discuss with my CPA before selling a rental?

Have the conversation before committing

Contact your CPA while you are evaluating a sale. Planning early gives your advisers time to review the proposed terms and identify questions for your attorney, broker and other professionals. Waiting until a return is due can leave fewer options for a transaction already completed.

Assemble the property’s history

Bring these records to your adviser:

• Purchase and closing documents.
• Improvement costs and supporting invoices.
• Depreciation schedules and prior tax returns.
• The proposed sale terms.
• Details of personal use, ownership changes and any earlier exchange.

Your mortgage payoff is not a substitute for a tax basis calculation.

Ask about the full tax picture

A sale can affect more than the property’s current-year income. Ask your adviser to evaluate gain, depreciation-related tax treatment, available losses, estimated payments and the states involved. IRS Publication 544 describes how sales and other dispositions are reported. The calculation depends on your records and circumstances.

Discuss a possible 1031 exchange early

A qualifying exchange may defer recognition of gain, but selling and then buying another property does not automatically qualify. Strict eligibility, proceeds-handling and timing rules apply. Discuss the structure with your CPA and a qualified intermediary before closing; IRS Form 8824 instructions explain the reporting framework.

Define the next steps

Ask who will review closing documents, calculate estimates and prepare the required filings. KFN can scope the tax review and coordinate with your transaction professionals. No tax outcome is guaranteed; the purpose of the early conversation is to make informed decisions with the facts available.

Sources & further reading

• IRS Publication 544: Sales and Other Dispositions of Assets
• IRS Instructions for Form 8824