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Old 02-09-2018, 07:03 AM
 
234 posts, read 464,017 times
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We have our primary house in Denver Colorado and a mountain property also in Colorado.

We are retired and the kids are almost on their own so want to sell both of these and buy a single new property also likely in Colorado.

The mountain property appreciated somewhat, the primary Denver property appreciated a lot.

I am thinking about selling (or at least attempting to sell) the mountain property this year and then sell the Denver property the following year and then turn around and put all or at least most of the money back into a new place in the same year we sell the Denver house.

I am wondering how tax's will work on this and if it would be best to just do all three of these transactions in the same tax year? It will be easier to do the plan where we take two years to do this but wanted to understand how the tax will work.
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Old 02-09-2018, 07:12 AM
 
Location: Just south of Denver since 1989
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Sell one. Move into the other. Sell the other one two years after that.

Wait until summer to sell the mountain one.
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Old 02-09-2018, 09:01 AM
 
Location: 5,400 feet
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If the Denver house is your primary residence and you have lived in it for 24 of the last 60 months when you sell, up to $250K gain (single) or $500K gain (married) is not taxed. Everything above those numbers is taxed as a long term capital gain in the year sold. Any gain on the sale of your mountain home, assuming you've owned it longer than year, will be a long term capital gain in the year sold (now is a good time to get your info together on costs and improvements).

Long term gains are taxed at 0 to 20%, depending on the amount of your other taxable income. Check the Qualified Dividends and Capital Gains Tax Worksheet in the 1040 instructions as to how that works.
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Old 02-09-2018, 09:36 AM
 
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I'll add that whether or not you purchase another house will have no bearing upon the amount of tax you might owe from the sale of your primary residence and your mountain property. If your mountain property is a second home (I'm assuming that it is), then are you open to moving there as 2bindenver suggests? Has it ever been rented? If so, I'd recommend that you talk with a tax professional since that would impact how much gain would be excluded on the sale of that property if you decided to live there two years. (If the gain would be relatively small, moving there would likely be an unnecessary complication.) It might be good to talk to a tax professional regardless.
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Old 02-11-2018, 12:54 PM
 
Location: North Idaho
19,708 posts, read 23,412,124 times
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With just that infirmation, I am going to jump to the conclusion that the primary house is eligible for the homeowners exemption. If so, I'd sell the primary house tax free and sell the mountain house and just pay capital gains on it. If it hasn't appreciated much, the tax bite won't be awful.

Just get both sold this spring and then take the money and buy your new place.

Tax law changes so it is a risk to make real estate plans for the future based on today's tax laws. You know what the law is right now, so just get it done and over with.
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Old 02-12-2018, 08:08 AM
 
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Does the value of the sale of those properties, either in the same year or in separate years, apply to means testing for medical insurance, i.e., Medicare? If the OP is on Medicare, this might be pertinent. Plus I'd like to know since I'm in a similar boat. Maybe this belongs in the health insurance forum, but it seems relevant to this post as well. If it does, the monthly medical insurance premium will take a hit, as I understand it, for the years in which the sale is reported to the IRS. Can anyone clarify?
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Old 02-12-2018, 09:01 AM
 
Location: 5,400 feet
1,709 posts, read 2,042,364 times
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Quote:
Originally Posted by movinon View Post
Does the value of the sale of those properties, either in the same year or in separate years, apply to means testing for medical insurance, i.e., Medicare? If the OP is on Medicare, this might be pertinent. Plus I'd like to know since I'm in a similar boat. Maybe this belongs in the health insurance forum, but it seems relevant to this post as well. If it does, the monthly medical insurance premium will take a hit, as I understand it, for the years in which the sale is reported to the IRS. Can anyone clarify?
The sale of your primary residence is simply not reported as it is excluded from income, so that will have no effect on your Medicare premiums. Any gains from the sale of a second home are included in your income so, depending on the amount, they could cause an increase in your part B premium two years later (2018 income will determine 2020 premiums). If there is a loss on the sale of a second home, the loss is likely not deductible but there will be no gain reported on your return.
https://www.ssa.gov/pubs/EN-05-10536.pdf
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Old 02-12-2018, 11:28 AM
 
841 posts, read 739,436 times
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Quote:
Originally Posted by jiminnm View Post
The sale of your primary residence is simply not reported as it is excluded from income, so that will have no effect on your Medicare premiums. Any gains from the sale of a second home are included in your income so, depending on the amount, they could cause an increase in your part B premium two years later (2018 income will determine 2020 premiums). If there is a loss on the sale of a second home, the loss is likely not deductible but there will be no gain reported on your return.
https://www.ssa.gov/pubs/EN-05-10536.pdf
Thank you! That's exactly what I needed to know. Have a great day - you've made mine!
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Old 03-06-2018, 09:05 AM
 
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Thanks.. great info!

Im 62 now so I think this year would be good to sell the mountain property as I understand that I need to be 65 in order to get medicare and the medicare premium would look back two years in determining rates (dont fully understand this..but I do understand it matters).

I have never rented the mountain property but I do need to look into how that affects tax when you go to sell.
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Old 03-06-2018, 02:45 PM
 
59,669 posts, read 61,725,466 times
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Quote:
Originally Posted by 2bindenver View Post
Sell one. Move into the other. Sell the other one two years after that.

Wait until summer to sell the mountain one.
It does not work like this anymore and has not since around 2007. If you move in to a property you owned that was not a primary the exclusion is prorated over how many years you owned the property in total.

They took away the ability to just move in to a vacation home or rental and reap the benefits of a primary.
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