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OT-Sale of Rental Property

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Old 02-04-2003, 09:13 PM
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Default OT-Sale of Rental Property

Does anyone know the tax law about the sale of a rental property and how to avoid the cap gains taxes? I know it has something to do with selling a rental property buy a new property within a certian time period and the new property has to be equal or greater in price than the previos property. Does anyone know the law that I am talking about. I am thinking selling a property that I have a decent amount of cap gains on and a friend made mention of this. HELP...
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Old 02-04-2003, 09:52 PM
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I think you gotta take the capital gains hit on rental property and cannot roll it to another like you can with a residence. As with any other investment, the cap gains is a real and valid form of "income" and is taxed accordingly.

The good part is that the cap gains rates are fairly "civil".

Now, your RESIDENCE (amd maybe even your second residence) qualifies for a "reinvestment period" where the gains are not taxed if reinvested into another residence.

ALSO you get a ONE TIME exemption from gains tax on a residential sale (up to 1/2 Million in gains).

As always, be sure to check with your tax advisor.
(but I am not familiar with a rollover for rental property).

If one exists, I'd like to know (I've got a piece that I'm gonna sell to the current renters and It'd be great to be able to roll the gains into a new one _I already got my eye on the rpelacement)
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Old 02-04-2003, 09:55 PM
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I am no expert here but I have heard that you have to live in it yourself for a given amount of time after you stop renting it out before you sell it in order to get away from the capital gains tax.
Selling it and buying another of same or more value only aplies to the house that you live in. Selling rental property will always cost you capital gains tax.
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Old 02-04-2003, 10:08 PM
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Whoa! Consult w a tax attorney..
There may be several options for you..
1. Do 1031 exchange to other rental, ie Florida, and all funds and depreciation from sale property move to new property..Must set up in advance.
2. Live in property 2 years of 5, sell and possibly no capital gains.
3. Maybe gift, quit claim, to children or other in family, who keep as investor property, refi and?..bottom line see attorney. Good luck!!

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Old 02-04-2003, 10:38 PM
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Well, it really is not a rental property, it was/is our summer home. It was the 1031 program I was thinking about. I will be talking to a tax attornewy/my accountant to get the exact info.
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Old 02-04-2003, 11:30 PM
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the 1031 exchange will work if you roll it over into another property of equal or greater value. A buddy of mine dumped a bunch of stocks to get into a commercial property. Coincidentally he now works for remax in lauderdale.

As my understanding of it you only pay eth capital gains tax once you finally sell off the proerty and put the cash back in your pocket. The idea is to keep flipping biulding to go bigger and bigger and eventaully tehy will throw off enough income so you can buy another biulding and start it again and have another property. Hell if i can get some loot together its sounds like a decent idea to me. Hell im gettign beat up in the market so i might as well get beat up in real estate too.....
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Old 02-05-2003, 07:09 AM
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sounds like you need to sell it for whats owed,and do the repairs to the front door for the balance you assume its worth!
 
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Old 02-05-2003, 10:56 AM
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This thread got me thinking about something that I have been trying to avoid.
I sold a condo that was my primary residence for less than I paid for it.

Since I sold it for less am I going to have to claim anything or pay any interest?

Cordell
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Old 02-05-2003, 11:54 AM
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Guys just buy waterfront in Fl. You will laugh all the way to the bank. I have 2 waterfront houses empty, don't want to rent them, won't spend a penny on them to fix up to get a decent rent factor. Just waiting for someone to buy them and tear them down and quadruple my investment. Damn things are tough down here.
 
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Old 02-05-2003, 02:11 PM
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jeff , that is another though

where are those properties? lauderdale perhaps? if they are and you dont; want to renth them i'd gladly take care of eth maintenece as "rent" if i can crash there
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