| Posted By |
Message |
Aliking
LIF Adolescent
Member since 5/05 525 total posts
Name:
Allison
|
Capital Gains Tax
Anyone know anything about it?
Thanks 
|
Posted 9/14/05 12:03 PM  |
| |
|
Long Island Weddings
Long Island's Largest Bridal Resource | Prudential Douglas Elliman Real Estate |
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
If you live in your home for two years and its your primary residence (you don't own any other property)... after two years of living there when you sell... you do not pay ANY capital gains taxes.
You are allowed to make a profit up to $250,000 and be exempt from any taxes. If you are married and your husband also owns it and he lived there for two years as well... you are exempt up to 500,000.
You do not have to "FLIP" this profit into a new house. You can sell... take all the profit... and then rent if you want.
If you lived there under two years and sell... there are other rules involved. I think you pay pro-rated gains taxes based on how long you were there.
|
| Posted 9/14/05 12:29 PM |
| |
|
Aliking
LIF Adolescent
Member since 5/05 525 total posts
Name:
Allison
|
Re: Capital Gains Tax
Thanks for the info!!! Do you know if it applies if its not a primary residence?
|
| Posted 9/14/05 1:36 PM |
| |
|
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
Posted by Aliking
Thanks for the info!!! Do you know if it applies if its not a primary residence?
If its not your primary residence... you must pay gains taxes.
But there are rules around this... if you lived there for two years straight... then bought another place.. but held onto the old place as investment and lived there for at least two years... you could be exempt from the taxes as well.
The rules get tricky when you have more than one property for an extended period of time.
I would speak to an accountant on this.
|
| Posted 9/14/05 1:54 PM |
| |
|
Erica
LIF Adult
Member since 5/05 11767 total posts
Name:
|
Re: Capital Gains Tax
if its not your primary residence...make sure that you gather up all your receipts to deduct from the profit...any improvements...any realtor fees/commission
you are only taxed on the total profit
|
| Posted 9/14/05 2:19 PM |
| |
|
rose825
Best Friends
Member since 6/05 10228 total posts
Name:
|
Re: Capital Gains Tax
Is it a once a lifetime thing?
|
| Posted 9/14/05 8:18 PM |
| |
|
jms100303
Luv my munchkins
Member since 5/05 4789 total posts
Name:
Jennifer
|
Re: Capital Gains Tax
You can waive capital gains tax sometimes, but that is a once in a lifetime thing. Otherwise like stated above.
|
| Posted 9/14/05 8:21 PM |
| |
|
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
Posted by jms100303
You can waive capital gains tax sometimes, but that is a once in a lifetime thing. Otherwise like stated above.
NONONONONONONO....
Sorry... but its not a once in a lifetime thing. I can't believe so many people still believe this.
You can buy and sell every two years and continue to exempt yourself from the capital gains taxes as long as you claim it as your primary residence for that time.
The once in a lifetime thing was part of the old rules which got eliminated in 1997.
Read my first post above... thats the correct information.
|
| Posted 9/14/05 8:24 PM |
| |
|
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
A Good Read - Capital Gains Tax Explained
Even better, there's no limit on the number of times you can use the home-sale exemption. In most cases, you can make tax-free profits of $250,000 (or $500,000 depending on your filing status) every time you sell a home.
There are also other ways you can exempt yourself from the gains if you HAVEN'T lived there for two years. Some ways to get out of gains include death (I believe of a family member or spouse), divorce, and a job relocation!
Message edited 9/14/2005 8:32:12 PM.
|
| Posted 9/14/05 8:30 PM |
| |
|
LMFitz
life is good
Member since 5/05 2013 total posts
Name:
L
|
Re: Capital Gains Tax
If it's not your primary residence you can avoid the tax by putting the money directly into another investment property - we just did it and it saved us about $35K.
|
| Posted 9/14/05 9:43 PM |
| |
|
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
Posted by LMFitz
If it's not your primary residence you can avoid the tax by putting the money directly into another investment property - we just did it and it saved us about $35K.
Show me a link where you can do this. I would really like to see it. Every article I have read has said otherwise.
|
| Posted 9/14/05 9:46 PM |
| |
|
DjPiLL
Member since 5/05 3664 total posts
Name:
Richard
|
Re: Capital Gains Tax
Here is another article clearly describing the "rental / investment part" of the capital gains law.
Another good read
It specifically says in order to eliminate the capital gains on your rental property... you MUST have lived in that property for at least two years.
I really don't mean to call you a liar or anything like that lmfitz. I could be wrong myself.
But I have a feeling you are being misadvised and if you bought and sold an investment property and didn't claim that as your primary residence for at least two years... the IRS may come back to collect those taxes from you.
Rental Conversion
Mary has a residence and a rental property. Both have substantially appreciated in value. Mary sells her primary residence, takes her capital gain exclusion of up to $250,000 on that residence, and decides to move into the rental unit. The rental unit now becomes her primary residence.
Mary resides in the rental unit for another two years to qualify for the ownership and use tests. Mary then sells the property and realizes a substantial gain... of which up to $250,000 can be excluded under the law. Poof... gone.
It makes no difference that most of the appreciation on the second property was realized when it was a rental unit. It also makes no difference that much of the taxable gain is attributable to depreciation that Mary claimed as a deduction against the property in prior years. Mary met all of the tests to exclude the gain and is therefore eligible to do so. Mary has used the tax laws to her advantage. She planned her life to rid herself of some substantial taxes. Nothing illegal or immoral about that.
|
| Posted 9/14/05 9:51 PM |
| |
|
Aliking
LIF Adolescent
Member since 5/05 525 total posts
Name:
Allison
|
Re: Capital Gains Tax
WOW there is a lot I have to learn! Thanks you so much for the info!!!
|
| Posted 9/14/05 10:15 PM |
| |
|
