Capital Gains on Rental Property sale - When to pay?

Forum|Forum|7 years ago
January 24, 2019
1 reply
0 views

We just sold our rental property and had no interest in putting the money into more real estate with a 1031, so we are blessed to get the opportunity to pay capital gains. I've more or less figured out how much I need to pay, I just need to know if I can wait to pay it in one lump sum on April 14, 2020 after doing my 2019 taxes, or if I'll get dinged for not paying it earlier? I've seen a bunch of mixed answers and with the government shutdown I can't ask MR & MRS IRS.

As a followup to that... If I do need to pay it now/before Dec 31, 2019 - Can I have it pulled out of my paycheck throughout the year or do I need to pay the IRS a big chunk before the end of Q1 as if it were a quarterly prepayment?

thanks

IsabellaG

Employee

You would need to pay the estimated taxes on the capital gain on this sale as a quarterly payment by the due date for the first quarter of 2019, April 15, 2019. It's a pay-as-you-go tax system, and since you sold the property in the first quarter of the year, that's when the payment is due.

If you wait until 2020 to pay the tax, you will be subject to an Estimated Tax Penalty. Since you earned the income all in the first quarter of the year rather than in equal increments, you can't just increase your withholding from your paycheck. The IRS Estimated Tax page and the TurboTax Discussion of Estimated Taxes provide more information.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"