Payments and Penalties

Capital Gains tax due date

Just sold investment property. It has capital gains. They will not be reinvested. When are taxes due on the gains? In the next quarter? If so, what forms are needed? Or due by April 15, 2022? For tax year 2020, I received a refund. Thanks for the help.


Congratulations on the sale!

As a CPA, I came across this website and joined just last week, and I just came across your question.

If you just sold an investment property in 2021, the income taxes on the capital gains are due on or by April 15, 2022.

You raise a good question. Without knowing the details of your tax situation, I can say that, in general, it is wise to make an estimated income tax payment using the 2021 Form 1040-ES for the estimated income taxes on the capital gain from the sale of the investment property as soon as possible. Why? To avoid the estimated income tax penalty that could be assessed. If applicable, that’s determined when you prepare your tax return next year. To pay in the next quarter, as you suggest, should be fine.

Also, this is assuming that the sale of the investment property was not structured as an installment sale. Additionally, this assumes that the property in question was always an investment property, never a primary residence or a rental property, so you must take the history of the property into consideration.

If you held the investment property for one year or less, you would pay tax at the same marginal tax bracket as your other ordinary income. On the other hand, if you held the investment property for more than one year, you would pay income tax at the long-term capital gains tax rate (maximum 20%).

Finally, you would need to consider if the 3.8% net investment income tax also applies to your situation.

Answer Provided by: Adam Dickreiter Adam Dickreiter

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