Area 1031 Exchanges For Selected Estate Traders When a real estate investor sells property, a funding gains tax is identified, along with a tax obligation on deprecation recapture. The regular funding gains tax obligation, deprecation regain, as well as any kind of applicable state tax can frequently cause a tax liability in the 20% to 25% array for the sale of realty. (If the real estate has actually been held for less than 12 months, all of the gain will certainly be exhausted at a lot higher short-term capital gains rates.).