Section 1031 Exchanges Genuine Real Estate Investors When an investor markets realty, a funding gains tax obligation is recognized, along with a tax on deprecation recapture. The routine capital gains tax, deprecation regain, and any type of applicable state tax can frequently cause a tax responsibility in the 20% to 25% range for the sale of property. (If the real estate has actually been held for less than twelve month, all of the gain will be tired at much greater short term capital gains rates.).