What Nebraska Apartment Owners Actually Net When They Sell

A plain-language guide to taxes, timing, and your real options -- for owners of 5-100 unit properties in the Omaha and Lincoln metro.

The Question Nobody Asks at the Listing Appointment

Most conversations about selling an apartment building start the same way: What is the property worth? What is it trading at per unit? What cap rate can I get?

Those are reasonable questions. But there is a more important one that almost never gets asked until it is too late:

"What will I actually net after taxes -- and what are my options to protect it?"

The gap between your sale price and what lands in your bank account surprises a lot of apartment owners. Not because they were not paying attention -- but because the tax rules that apply to multifamily property are genuinely complicated, and most of what is available online is written for a national audience, not for Nebraska owners specifically.

This guide is written for you. It walks through the taxes that hit when you sell, the traps most owners do not see coming, a realistic example using local numbers, and the three options you have for handling the proceeds.

Nothing here is tax or legal advice. You will need a CPA who knows real estate -- and this guide will help you know what to ask them.

Section 1: What Sellers Expect vs. What Actually Happens

Here is the most common version of the math sellers do in their heads:

What Most Sellers Calculate	Amount	Notes
Sale Price	$900,000
Less: Selling Costs (rough guess ~4%)	($36,000)	Commission -- often underestimated
Net Proceeds (estimated)	$864,000
Less: What I Originally Paid	($325,000)	2000 purchase price
My Assumed Gain	$539,000	Simple subtraction
Estimated Tax (~20% on gain)	($115,000)	Assuming flat capital gains rate
Expected Net to Owner	~$749,000	Total cash after costs and tax

That math is not wrong -- it just is not complete. It misses selling costs, the way your taxable gain is actually calculated, and three additional layers of tax beyond the standard capital gains rate.

Here is what the same property actually looks like when you run the full numbers. This is a hypothetical 12-unit building purchased in Omaha in 2000 for $325,000, sold in 2026 for $900,000, with $75,000 in capital improvements made during ownership.

Line Item	Amount	Notes
PROCEEDS
Sale Price	$900,000
Less: Selling Costs (7%)	($63,000)	Commission, title, closing fees
Net Sale Proceeds	$837,000
BASIS CALCULATION
Original Purchase Price (2000)	$325,000	Edit to your actual figure
Plus: Capital Improvements (roof, HVAC, rehabs)	+ $75,000	Increases basis -- reduces gain
Less: Depreciation on Building (25 yrs)	($250,909)	27.5-yr schedule on building value
Less: Depreciation on Improvements	($43,636)	27.5-yr schedule from date placed in service
Adjusted Basis	$105,455	The IRS's starting point for your gain
GAIN & TAX
Total Taxable Gain	$731,545	Net proceeds minus adjusted basis
Depreciation Recapture @ 25%	($73,636)	On $294,545 of recaptured depreciation
Federal Capital Gains @ 20%	($87,400)	On remaining $437,000 of gain
Net Investment Income Tax @ 3.8%	($27,799)	Applied to full $731,545 gain
Nebraska State Tax @ 5.84%	($42,722)	Full gain -- no preferential state rate
SUMMARY
Gross Sale Price	$900,000
Total Selling Costs	($63,000)	7%
Total Tax Bill	($231,557)	Replace with your CPA's actual figure
Estimated Net to Owner	~$605,443	~67 cents on the dollar

And side-by-side, the gap between the two:

Calculation Point	Back of the Napkin	Actual Outcome
Sale Price	$900,000	$900,000
Less: Selling Costs	($36,000)  est. 4%	($63,000)  actual 7%
Net Proceeds	$864,000	$837,000
Taxable Gain	$539,000  (sale minus basis)	$731,545  (adjusted basis calc)
Tax Rate Applied	~20% flat assumption	4 separate rates stacked
Total Tax Bill	~$115,000	~$231,557
Net to Owner	~$749,000	~$605,443
Difference	--	~$143,557 LESS than expected

On a $900,000 sale, a Nebraska apartment owner in this scenario nets approximately $605,000 -- roughly $144,000 less than the $749,000 their napkin math suggested. That gap comes from two sources: $27,000 more in selling costs than estimated, and $117,000 more in taxes than anticipated. That is not a reason not to sell. It is a reason to plan.

All figures are illustrative. Tax rates reflect 2026 estimates. Replace bracketed figures with your actual purchase price, improvement costs, and depreciation history. Consult a CPA before making decisions.

Section 2: The Four Taxes That Hit When You Sell

Selling an investment property triggers up to four separate federal and state taxes simultaneously. Each applies to a different slice of your gain.

Tax Component	Rate	Applied To
Federal Capital Gains	15-20%	Gain above your adjusted basis
Net Investment Income Tax (NIIT)	+3.8%	When income exceeds $200K single / $250K married
Section 1250 Depreciation Recapture	25%	All depreciation taken or allowable over holding period
Nebraska State Tax	Up to 5.84%	Full gain taxed as ordinary income -- no preferential rate
Potential Combined Impact	30-40%+	Of total equity proceeds, depending on your situation

1. Federal Long-Term Capital Gains (15-20%)

The tax most owners expect. It applies to the difference between your net sale proceeds and your adjusted basis. The adjusted basis is not simply what you paid -- it is your purchase price, plus capital improvements, minus all depreciation taken over the years. For a long-held property, depreciation has typically reduced that basis far more than improvements have increased it, which means the taxable gain is almost always larger than sellers anticipate.

2. Net Investment Income Tax -- NIIT (3.8%)

This 3.8% surtax applies to your gain if your modified adjusted gross income exceeds $200,000 single or $250,000 married filing jointly. Most established Omaha and Lincoln apartment owners will hit this threshold in the year they sell. It is often missing from back-of-envelope estimates.

3. Section 1250 Depreciation Recapture (25%)

This is the bill that surprises the most people. Every year of ownership, the IRS allowed you to deduct depreciation against your income. When you sell, they tax it back -- at up to 25%, regardless of your income bracket. This is a separate charge from capital gains and applies to the full pool of depreciation taken on both the building and any capital improvements.

The IRS taxes back depreciation you could have claimed, even if you never actually did. Under the "allowed or allowable" rule, skipping depreciation deductions during ownership does not reduce your recapture bill at sale. If your accountant never set up a depreciation schedule, you still owe the recapture -- but you also never got the annual deductions. Talk to your CPA before you list.

4. Nebraska State Tax (Up to 5.84%)

Nebraska taxes capital gains as ordinary income, at the same rate as regular income -- up to 5.84% in 2026. There is no preferential rate for long-term gains the way federal law provides. For most national content on this topic, the state tax is either missing or underestimated. For a Nebraska owner, it adds meaningfully to the total bill.

Section 3: Capital Improvements -- The Basis Booster Most Owners Undercount

There is one factor that works in your favor -- and that many long-term owners fail to fully account for: capital improvements made during the holding period.

Every dollar spent on a qualifying capital improvement increases your adjusted basis, which directly reduces your taxable gain dollar-for-dollar. For a property held 20-plus years, this can be substantial: a new roof, HVAC replacement, major unit renovations, electrical upgrades, plumbing overhauls, new windows, repaved parking. These are not repairs -- they are improvements that extend the useful life or increase the value of the property.

Improvements vs. Repairs: The IRS Distinction

• Capital improvements: Capitalized and added to your basis. Examples: roof replacement, new HVAC, added units, foundation work, full unit renovations. Depreciated on their own schedule from the date placed in service.

• Repairs and maintenance: Expensed in the year incurred -- do not add to basis. Examples: fixing a faucet, repainting a unit, replacing a single appliance. The line between the two is not always obvious, and a CPA experienced in real estate should categorize them.

Documentation Is Everything

Capital improvements only reduce your tax bill if you can prove you made them. The IRS requires documentation: contractor invoices, permits, bank records showing payment. If you paid a contractor in cash 15 years ago and kept no paperwork, that improvement may not be recoverable. Before you list, gather every receipt and invoice you can find. Even partial records help -- bank statements showing large payments to contractors can support a claim even without a formal invoice.

Improvements Also Carry Their Own Recapture

One nuance: capital improvements are depreciated separately from the original building, starting from the date placed in service. That means the depreciation taken on improvements is also subject to recapture at 25% when you sell. So improvements reduce your overall gain, but their depreciation adds to the recapture pool. The net effect is still almost always favorable -- but it is not as simple as "every dollar of improvements saves me 20 cents in tax."

The correct basis formula your CPA should be using: Original Purchase Price + All Capital Improvements - All Depreciation Taken (on the building and on each improvement separately) = Adjusted Basis.

Section 4: Your Three Options -- and What Each One Costs You

Once you understand the tax exposure, the next question is what to do about it. There are three main paths.

	Option 1: Sell & Pay	Option 2: 1031 Exchange	Option 3: 1031 into DST
Tax Impact	Pay full bill at closing	Deferred indefinitely	Deferred indefinitely
Management	Exit completely	Buy another active property	No management -- ever
Liquidity	Full cash at closing	Equity stays in real estate	Illiquid; limited secondary market
Timeline	Flexible	45-day ID / 180-day close	Can close in days
Best For	Owners wanting full exit or with offsetting losses	Owners who still want active real estate	Owners 60+ wanting passive income, no landlord duties
Key Risk	Large immediate tax bill	Tight deadlines; must find replacement	Accredited investors only; no asset control

Option 1: Sell and Pay the Taxes

Sometimes the straightforward answer is right. If you have capital losses elsewhere to offset the gain, if this is a low-income year, or if you simply want full liquidity with no strings attached -- selling outright and paying the taxes makes sense. The key is knowing the number before you list, not after you close. A CPA can model this 12-18 months in advance, which gives you time to plan around it.

Option 2: 1031 Exchange -- Defer the Tax, Buy Another Property

A 1031 exchange lets you sell and reinvest the proceeds into like-kind replacement property, deferring your entire tax bill indefinitely. The tax follows the new property rather than disappearing, but deferral is powerful: every dollar that would have gone to the IRS stays invested and compounding.

The rules are strict. You have 45 days from the sale closing to identify your replacement and 180 days to close on it. Miss either deadline and you pay the full tax. In Omaha's current market, limited inventory in the 1-100 unit range makes advance identification critical -- do not start looking after you are under contract.

Option 3: 1031 into a Delaware Statutory Trust (DST)

Less well known but increasingly relevant for Omaha and Lincoln owners who are tired of active management: a Delaware Statutory Trust qualifies as like-kind replacement property under 1031 rules, but instead of buying another apartment building, you exchange your equity into a fractional ownership stake in a professionally managed institutional property. No tenants, no maintenance, no management decisions.

DSTs generate passive income distributions and can often close in days, making them practical when 1031 timelines are tight. They are available only to accredited investors, are illiquid, and the investor has no control over property-level decisions. But for an owner in their 60s who has built 20-plus years of equity and is ready to stop being a landlord -- without handing 30-40% of that equity to the IRS -- the DST deserves a serious conversation with a financial advisor.

Section 5: When to Start Planning

• 18-24 months before sale: Have your CPA model the tax impact under each scenario. Identify missed depreciation and file Form 3115 if needed. Begin evaluating whether a 1031 or DST is realistic.

• 12 months before sale: Get a current market valuation from a broker who specializes in multifamily. Understand your property's position before you commit to a strategy.

• 6 months before sale: Prepare your rent roll, lease files, and 3 years of operating statements. Properties that are documentation-ready close faster and at stronger prices.

• 3 months before sale: Select your broker, finalize your pricing strategy, and -- if pursuing a 1031 -- pre-identify replacement properties or DST sponsors before the clock starts.

• At listing: Your tax plan should already be in place. The 45-day 1031 identification window begins the moment your sale closes -- not when you start thinking about it.

Section 6: Questions to Ask Your CPA Before You List

• What is my adjusted basis, calculated as purchase price plus all capital improvements minus all depreciation taken?

• Do I have adequate documentation for capital improvements? If records are incomplete, what can we reconstruct from bank statements or permits?

• Have I properly claimed all available depreciation? If not, should we file Form 3115 before the sale?

• What is my estimated total tax bill, broken out by capital gains, recapture, NIIT, and Nebraska state tax?

• Does a 1031 exchange make mathematical sense, or does the deferred bill eventually offset the benefit?

• Am I an accredited investor? If so, is a DST worth exploring as a 1031 replacement?

• Are there losses elsewhere in my portfolio I should realize before this sale to offset the gain?

• What calendar year should I close the sale in, given my other income?

If your CPA struggles with any of these questions, that is useful information. A CPA with deep real estate investment experience will answer them readily.

We Run This Analysis for Omaha and Lincoln Apartment Owners

If you own multifamily property in the Omaha or Lincoln metro and are beginning to think about your exit -- even if selling is still 2-3 years away -- we are happy to walk through a no-obligation analysis of your property's current market value and a preliminary estimate at what the numbers might look like.

We work exclusively with apartment and investment property owners in Eastern Nebraska. We know this market, the buyers, and how to position properties in the 5-100 unit range for the right outcome.

Disclaimer: This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rates reflect 2026 estimates and are subject to change. Every property owner's situation is different. Consult a qualified CPA and attorney before making any decisions regarding the sale of investment property.

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