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their was a law where if you owned a house for only a few months you didnt have to pay taxes on the profits of a sale if you bought a house of equal or greater value.
I will be "flipping a condo"that took 2 years to build but,will only have recently officialy closed it to put it on the market...
I want to take the profits and head to raleigh, i know about the law change where if you live in it for 2 years or more,its tax free, but what about if you havent lived in it for that time?
their was a law where if you owned a house for only a few months you didnt have to pay taxes on the profits of a sale if you bought a house of equal or greater value. I will be "flipping a condo"that took 2 years to build but,will only have recently officialy closed it to put it on the market... I want to take the profits and head to raleigh, i know about the law change where if you live in it for 2 years or more,its tax free, but what about if you havent lived in it for that time?
Hi Canine7,
If it's not your personal home and you haven't lived in it for at least two years then the laws are different than the capital gains law change that you've referred to. My best advice is to consult with a CPA or tax Attorney who is very knowledgeable about or specializes in 1031's. The IRS also has a lot of good information on their website about 1031 exchanges (if that's what you are doing) but it takes a while to slog through.
their was a law where if you owned a house for only a few months you didnt have to pay taxes on the profits of a sale if you bought a house of equal or greater value.
I will be "flipping a condo"that took 2 years to build but,will only have recently officialy closed it to put it on the market...
I want to take the profits and head to raleigh, i know about the law change where if you live in it for 2 years or more,its tax free, but what about if you havent lived in it for that time?
It's not clear whether this condo was purely an investment property, or you lived in it for less than 2 years as your primary residence. An investment property triggers 1031 issues, i.e. transferring the proceeds into another property or paying capital gains. If it was a primary residence, then 1031 doesn't apply, though you have capital gains issues because your length of occupancy was less than 2 out of 5 years. Many people will tell you that you have to pay capital gains if you make a profit on a primary residence that you occupied less than 2 out of 5 years. Not necessarily. Your post suggests that you are "heading for Raleigh." If that is 50 miles away from you current residence, then the IRS has special rules that might help you and that may lessen your capital gains obligations, i.e. pro rata capital gains taxes that conform with your length of occupancy.
I'm no expert on these issues, but we do own a few investment properties, and we are making a profit on a primary residence that we occupied for less than 2 years and moving across the US. So I've spent some fun-filled hours with the IRS! As you probably know, the IRS changed these laws back in 1997. Its website does have some user-friendly summaries of this topic. Also, you may want to simply google "capital gains on primary residence" or "capital gains on investment property" for more specific advice. And, of course, a tax attorney or CPA would be very helpful.
Hope this helps. I know you probably want "an answer," since referral to the IRS or a CPA is a fate worse than death , but I doubt anyone will, or should, give anything but fairly generic advice on this topic. But I do think you can find some pretty user friendly web sites and articles that can give you a pretty good idea of where you stand.
connie,
we are in miami-we "invested" in a preconstruction condo-20 stories(in the early stages)...
We moved in with my parents to save money until its completion.
We were going to live in it,It was supposed to take 1 year,now 2 and a half years,and 1 child later, it is about 3 months from completion.
REAL ESTATE prices have gone throught the roof/and so will are association fees.
We want to move to raleigh next year,but have no idea how much of a hit we will take on taxes,capital gains,stc.
You cannot say it is yours until the closing,when the building is finished.
So even though its been well over 2 years,the clock doesnt start until we close.
We want to sell immediately.....Hope someone can shed more light on this
connie,
we are in miami-we "invested" in a preconstruction condo-20 stories(in the early stages)...
We moved in with my parents to save money until its completion.
We were going to live in it,It was supposed to take 1 year,now 2 and a half years,and 1 child later, it is about 3 months from completion.
REAL ESTATE prices have gone throught the roof/and so will are association fees.
We want to move to raleigh next year,but have no idea how much of a hit we will take on taxes,capital gains,stc.
You cannot say it is yours until the closing,when the building is finished.
So even though its been well over 2 years,the clock doesnt start until we close.
We want to sell immediately.....Hope someone can shed more light on this
Maybe you can sell your contract. If you want to sell immediately, and the property won't be done for another few months, you might be able to sell, or assign, your rights as a buyer. The people in charge of the condo association might be able to help you, or perhaps a real estate agent. One thing I'd want to know - do capital gains even apply to you? Do you actually own a condo, or just your rights under the construction contract? And if it's the latter, then do capital gains taxes apply if you sell those rights? You might want to start with just calling the condo association or builder, and feel out your status. You could even call a few other builders in the area and just ask what happens if you want to sell before your home/condo is complete and see if you get the same answer from people. You can't be the first people who have wanted to sell new construction before it was complete. They might have a pretty basic response for what happens in that situation, which you can work from and verify. It might streamline and minimize any meeting you end up having with CPAs or lawyers, because you'll just have a better feel for the problem and the various issues.
I can't believe you had to wait so long for the property to be complete!! What a hassle - I'll bet there an uprising by the residents. I hope things are okay living with your parents, and that things go well for you in Raleigh!
its on the market,which actually means im trying to assign it...
Hope all goes well,and i will be taking my kid trick or treating in raleigh by next halloween.
Anybody truly understand the ins/outs of cap gains on pre-sale condos?
Like the prior poster, I have a presale townhome with a lot of appreciation and want to flip it...but not do a 1031X on it. I figure the townhome surely has to be a capital asset (I'm not a real estate investor by trade, so there's surely no way this could be considered ordinary income)...but, my situation is a little different from normal in that I want to flip the contract/assign it before I've actually bought the finished condo...basically, I'm selling the paper, which will give my property rights to acquire the unit, to somebody else at a pre-set price...which, to me, sounds a lot like an option/futures contract...only for real estate rather than some other commodity.
Long story short, I'm pretty sure this should generate a cap gain for me, and I *think* it should be long-term if I've held the paper more than a year (I think the story would be quite diff if I were to close and sell the townhome itself...I think that would certainly start the clock over...but I'm not selling a townhome, I'm selling the contractual right to buy a townhome)...the problem is that I can't find any really good guidance on the tax implications. I've got an Ivy League law degree, so I'm not afraid of technical materials...in fact, I'd welcome them...really want to just understand this relatively esoteric question so that I report this correctly. Any advice would be welcome!
Brian
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, but I doubt anyone will, or should, give anything but fairly generic advice on this topic. But I do think you can find some pretty user friendly web sites and articles that can give you a pretty good idea of where you stand.
Anybody truly understand the ins/outs of cap gains on pre-sale condos?
