Do I pay capital gains tax when I sell my assisted living facility?
Direct answer
Usually some tax is due, yes. The gain allocated to the business and the furniture and equipment is taxable in the year of sale, and depreciation recapture on equipment is ordinary income. The gain on the real estate can be deferred if you complete a 1031 exchange.
What to know
How much you pay depends on the allocation between the real estate, the FF&E and the business, your adjusted basis, and whether you exchange. A 1031 exchange defers the real estate gain only, and it requires a qualified intermediary in place before closing, plus the 45-day and 180-day deadlines.
If you do not exchange, the full gain is generally recognized in the year of sale. Because the numbers are specific to your basis, depreciation history and deal structure, review them with your CPA before you go to market.
This is general information, not tax, legal or investment advice. Talk to your CPA and attorney about your situation.
How Haven helps
Haven walks sellers through the sale process and the planning choices that affect taxes, alongside their own advisors. See how we sell assisted living facilities.