Large Capital Gain on my condo (Wells: fit in, to buy, closing)

[NYGiantsFan75]

My wife and I was fortunate to buy a place during the financial meltdown in 2009.
The property is a 3 bedroom in Williamsburg and i'm looking to sell it. Based on recent quoted prices by my realtor, the cap gain is close to 800K. I'm married with no kids at the moment and my wife is also on the deed. Does anyone know what my options are and the tax liabilities with selling a place after 5 years in NYC?

This is what I've found so far (correct me if i'm wrong):

* 500K Tax free on cap gain for married couple if you can prove you stayed in that unit for 2 years over the past 5 years.

* 1031 Exchange - Sort of fuzzy on this. If i sell my unit for 1.3 million, do i have to purchase another unit for close to same price? If i have 800K capital gains, do i have to use the entire 800K on the purchase of the next home? Can i take the 500K tax free and then use remaining amount on another property?

* NYC taxes. If i decide to take the 500K in tax free, is that just federal or does it include state? If it doesn't include state, would i be taxed on the entire 800k?


Thank You for replying.

[SandyJet]

I would move out of condo and declare your residence as not in NYC, sell condo take 500K tax free gain and be generous with the cost of improvements. Remember closing costs to buy and sell also count against gain.

Sometimes folks sell the "furniture" One guy offered me his place for 100K off if I paid 85K for his "furniture" in a sep cash deal.

1031 you can kick can down the road but that is normally an investment prop gain swaped for another invest prop gain.

I would buy bullet and sell as the 500K gain tax free is an amazing deal

[Wells5]

With such a big potential profit in so short a time, you can easily afford a consultation with a CPA or tax lawyer.

[Above Average Bear]

Originally Posted by NYGiantsFan75

My wife and I was fortunate to buy a place during the financial meltdown in 2009.
The property is a 3 bedroom in Williamsburg and i'm looking to sell it. Based on recent quoted prices by my realtor, the cap gain is close to 800K. I'm married with no kids at the moment and my wife is also on the deed. Does anyone know what my options are and the tax liabilities with selling a place after 5 years in NYC?

This is what I've found so far (correct me if i'm wrong):

* 500K Tax free on cap gain for married couple if you can prove you stayed in that unit for 2 years over the past 5 years.

* 1031 Exchange - Sort of fuzzy on this. If i sell my unit for 1.3 million, do i have to purchase another unit for close to same price? If i have 800K capital gains, do i have to use the entire 800K on the purchase of the next home? Can i take the 500K tax free and then use remaining amount on another property?

* NYC taxes. If i decide to take the 500K in tax free, is that just federal or does it include state? If it doesn't include state, would i be taxed on the entire 800k?


Thank You for replying.

Am in the middle of a 1031 exchange right now. The 1031 can only be done on an investment property. You can't use it for a owner occupied residential property. If you sell your investment
unit for 1.3 you have to invest all 1.3 into another investment property that can't be occupied for 2 years. You also have to carry over the same or more on any mortgage.

[Above Average Bear]

Here is an IRS link regarding 1031 exchange rules, good luck

Like-Kind Exchanges Under IRC Code Section 1031

[bbnetworking]

Originally Posted by SandyJet

I would move out of condo and declare your residence as not in NYC, sell condo take 500K tax free gain and be generous with the cost of improvements. Remember closing costs to buy and sell also count against gain.

Sometimes folks sell the "furniture" One guy offered me his place for 100K off if I paid 85K for his "furniture" in a sep cash deal.

1031 you can kick can down the road but that is normally an investment prop gain swaped for another invest prop gain.

I would buy bullet and sell as the 500K gain tax free is an amazing deal

If they moved out and declare residence not in NYC, this unit will be considered investment property, they won't be eligible for $500k tax free on primary residence.

i would consult a tax accountant.

[bbnetworking]

Originally Posted by Wells5

With such a big potential profit in so short a time, you can easily afford a consultation with a CPA or tax lawyer.

No kidding. Williamburg is asking Mahanttan prices.... If you only put down 20%, that's 600% profit in 5 years...

[SandyJet]

Originally Posted by bbnetworking

If they moved out and declare residence not in NYC, this unit will be considered investment property, they won't be eligible for $500k tax free on primary residence.

i would consult a tax accountant.

Still Primary if 2 out of the last five years it was your primary. A tax accountant is a walking stick for a blind man. He really should research this himself it is all on line at irs website. If he still needs help after that call an accountant