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Old 05-02-2021, 10:04 AM
 
7,811 posts, read 9,888,944 times
Reputation: 14333

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Quote:
Originally Posted by MidValleyDad View Post
Is the house an investment property or a place to live? Are you buying a new (to you) house to live in? As long as you reinvest the gain in a new house you are fine. If it was just an investment what is the difference if you made the gain on the house or a well chosen stock? Capital gains is capital gains.
It doesn't work that way anymore.
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Old 05-02-2021, 10:36 AM
 
88,469 posts, read 86,062,026 times
Reputation: 63744
Quote:
Originally Posted by MidValleyDad View Post
Is the house an investment property or a place to live? Are you buying a new (to you) house to live in? As long as you reinvest the gain in a new house you are fine. If it was just an investment what is the difference if you made the gain on the house or a well chosen stock? Capital gains is capital gains.
That law about reinvesting is long gone. It has not been that way in decades
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Old 05-02-2021, 11:35 AM
 
3,776 posts, read 1,705,155 times
Reputation: 6967
Quote:
Originally Posted by MidValleyDad View Post
Is the house an investment property or a place to live? Are you buying a new (to you) house to live in? As long as you reinvest the gain in a new house you are fine. If it was just an investment what is the difference if you made the gain on the house or a well chosen stock? Capital gains is capital gains.
The reinvestment law was repealed a long time ago, in 1997.
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Old 05-02-2021, 04:45 PM
 
12,987 posts, read 4,026,809 times
Reputation: 11276
Quote:
Originally Posted by whoisjongalt View Post
Is there any way to avoid paying capital gains tax on my primary residence? I understand that a gain up to $250,000 is non-taxable (single) but after that I will taxed at 15% on any additional gain. At this point, my gain is $300-$350K so $15K in taxes max (based on $600K). I hate the idea of writing a check to the government just because I made a smart real estate investment.
You can convert to a rental for 2 years and then do a 1031 Exchange.
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Old 05-02-2021, 04:54 PM
 
12,987 posts, read 4,026,809 times
Reputation: 11276
[quote=jackmichigan;60953429]
Quote:
Originally Posted by oregonwoodsmoke View Post

I realize that it's trendy these days to spread gross misinformation for political purposes, but it's still not very becoming.

For the record, I would be against raising the capital gains tax to 40%.
So you are saying he isn't trying to do this?
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Old 05-02-2021, 05:11 PM
 
88,469 posts, read 86,062,026 times
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Quote:
Originally Posted by Grlzrl View Post
You can convert to a rental for 2 years and then do a 1031 Exchange.
Then he looses the 250k exclusion and risks higher capital gain taxes when he eventually sells.
My vote is don’t do this.

Why open yourself up to the whims and outcomes of tenants as well if there was no plan to be a landlord in the first place …
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Old 05-02-2021, 05:53 PM
 
1,793 posts, read 847,872 times
Reputation: 6399
[quote=Silverfall;60953321]
Quote:
Originally Posted by oregonwoodsmoke View Post

I really dislike this fear-mongering type of stuff. Doesn't it tire you out not discussing things in context?

The context is...

Biden's proposal is to raise it that high for people making an annual income of over $1M a year. So if the OP makes that AND the Biden tax proposal passes Congress, then yes, they could expect to pay that 39.6% capital gains tax rate.

If you don't make an annual income of $1M a year, then it doesn't impact you so don't panic.

OP, as others have stated capital gains is on the basis. The basis is what you paid for it, plus commissions/closing costs, and improvements minus depreciation. If you improved the home, you might find that you are better off than you think. Most people improve their property and forget to take that into consideration when determining capital gains.
Depreciation is a business deduction and is not allowed on a Primary Residence or second home. Only allowed on investment property.
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Old 05-02-2021, 07:10 PM
 
Location: USA
2,525 posts, read 996,270 times
Reputation: 7191
[quote=Silverfall;60953321]
Quote:
Originally Posted by oregonwoodsmoke View Post

I really dislike this fear-mongering type of stuff. Doesn't it tire you out not discussing things in context?

The context is...

Biden's proposal is to raise it that high for people making an annual income of over $1M a year. So if the OP makes that AND the Biden tax proposal passes Congress, then yes, they could expect to pay that 39.6% capital gains tax rate.

If you don't make an annual income of $1M a year, then it doesn't impact you so don't panic.

OP, as others have stated capital gains is on the basis. The basis is what you paid for it, plus commissions/closing costs, and improvements minus depreciation. If you improved the home, you might find that you are better off than you think. Most people improve their property and forget to take that into consideration when determining capital gains.

You may dislike fear-mongering but I dislike mis-information. Your statement is incorrect. You are wrong.

First, if you subtract depreciation from the cost basis, you will get a lower cost basis and raise your taxable gain.

Second, depreciation doesn't apply to personal residences, only investment properties.
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Old 05-02-2021, 09:44 PM
 
Location: Salem, OR
14,835 posts, read 36,137,322 times
Reputation: 14961
[quote=Lillie767;60956652]
Quote:
Originally Posted by Silverfall View Post


You may dislike fear-mongering but I dislike mis-information. Your statement is incorrect. You are wrong.

First, if you subtract depreciation from the cost basis, you will get a lower cost basis and raise your taxable gain.

Second, depreciation doesn't apply to personal residences, only investment properties.

My statement about Biden's proposal is correct, that is what he is proposing. But yes, I was thinking investment and not owner occupant.
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Old 05-02-2021, 09:46 PM
 
Location: Salem, OR
14,835 posts, read 36,137,322 times
Reputation: 14961
[quote=jackmichigan;60953429]
Quote:
Originally Posted by oregonwoodsmoke View Post

I realize that it's trendy these days to spread gross misinformation for political purposes, but it's still not very becoming.

For the record, I would be against raising the capital gains tax to 40%.
I'm not saying I am for it, but it does need to be put into context. I don't think it will pass Congress anyway so it is kind of a moot point.
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