John presently owns an office building, which is 30 years old, and is considering renovating it. Assume that if John does the renovation, he will be able to obtain a new loan that is equal to the balance of the existing loan plus 75% of the renovation costs. Assume a five-year holding period. Below is the information about the property and John's estimation if he does the renovation. CURRENT IF RENOVATED Purchase Price 1,000,000 Renovation Cost 400,000 Building Value 800,000 Initial Increase in NOI (year 4) 20.00% Land Value 200,000 Loan-to-value ratio 75.00% Interest 9.00% Annual Increase in NOI Resale Value after holding 5 years Selling Expenses 3.00% 1,523,000 3.00% of sale price Term 30 years New Loan: Payments per year Years since Purchased Current NOI (year 4) Projected Increase in NOI Resale Value Today Depreciable Life Ordinary income tax rate Price appreciation tax rate Depreciation recapture tax rate 12 Interest Rate 11.00% 3 Term 30 years 90,000 Payments per year 12 2.00% per year 1,050,000 39 years 28.00% 28.00% 28.00% What is the capital gain tax from the property sale by the end of year 8 if John does renovate the property? (Choose the nearest value) $45,949 $43,077 $60,308 $81,955