Real Estate Tax Consequences ?

bigdog · 01-26-2021, 11:46 AM

I plan on selling some Real Estate, which I have owned, less than one year.

Are there any tax laws consequnces I should be aware of, selling within this short amount of time.

Not sure if I will have any taxable gains, until I see what price the property actually sells ?

Appreciate folks feedback, thanks !

phoenix · 01-26-2021, 11:52 AM

is it your primary residence . if not i think gain would be taxable if primary I think you need to stay 2 years to avoid the tax . I will leave it to any accts on the forum to give a better answer

TheProfessor · 01-26-2021, 12:39 PM

Quote:

Originally Posted by phoenix

is it your primary residence . if not i think gain would be taxable if primary I think you need to stay 2 years to avoid the tax . I will leave it to any accts on the forum to give a better answer

Excellent answer.

We have many pseudo accountants here.

bigdog · 01-26-2021, 01:37 PM

Note, this is NOT my primary residence !
As such I cannot receive any exclusion.

If I have no gain in the sale, I assume there would be NO tax incurred.
If a gain, would only pay on that Gain amount, the difference between what the property was purchased at, and what it sold for. Right now I believe Capital gain tax is at 15%.

joey2665 · 01-26-2021, 01:39 PM

Quote:

Originally Posted by bigdog

I plan on selling some Real Estate, which I have owned, less than one year.

Are there any tax laws consequnces I should be aware of, selling within this short amount of time.

Not sure if I will have any taxable gains, until I see what price the property actually sells ?

Appreciate folks feedback, thanks !

Regardless of primary residence, second home or investment property since the holdings period is less than 2 years for primary and less than one year for second home or investment property any taxable gain will be subject to ordinary income tax rate (not the capital gains rate) for the bracket you fall into with all your taxable income from the year of sale.

FYI I am not a pseudo accountant, I am a CPA

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bigdog · 01-26-2021, 02:37 PM

Quote:

Originally Posted by joey2665

Regardless of primary residence, second home or investment property since the holdings period is less than 2 years for primary and less than one year for second home or investment property any taxable gain will be subject to ordinary income tax rate (not the capital gains rate) for the bracket you fall into with all your taxable income from the year of sale.

FYI I am not a pseudo accountant, I am a CPA

Sent from my iPhone using Winnipesaukee Forum mobile app

TO Joey2665

FYI, This is a second home...
So if I read your response correctly between the lines, if I hold property for 'more than' one year than it would fall into normal capital gains tax of 15%, and NOT as ordinary personal income tax rate... Do I have this correct?

Thanks !

MeredithMan · 01-26-2021, 03:08 PM

....If you've made substantial improvements to the property, (e.g., renovations, new HVAC, new roof, etc), that cost can be added to your purchase price to come up with your "basis", which is then subtracted from your sales price, to determine what your gain, if any, is.

Example: original purchase price is $500K. You put in a new kitchen for $50K and a new roof for $20K. Your "basis", (cost), for tax purposes is $570K. You now sell the house for $600K. Your gain on the sale is $30K. You would obviously need all the receipts or contracts for the work done to substantiate the basis. (I assume this is still allowed, as it was in 2019 when we last sold a home).

Note: consult an accountant / tax professional for proper advice!

bigdog · 01-26-2021, 03:29 PM

Thanks MeredithMan for the followup, greatly appreciated !

8gv · 01-26-2021, 07:42 PM

If you really want to save on taxes sell it to me at $100,000 below market.

Wentworth06 · 01-26-2021, 08:42 PM

Less than a year taxed at your regular rate. Long term as stated above is less right . I would hold out if I could to get to long term. I have been on both sides and writing the smaller check is much easier. Just my 2 cents.

joey2665 · 01-26-2021, 10:36 PM

Quote:

Originally Posted by bigdog

TO Joey2665

FYI, This is a second home...

So if I read your response correctly between the lines, if I hold property for 'more than' one year than it would fall into normal capital gains tax of 15%, and NOT as ordinary personal income tax rate... Do I have this correct?

Thanks !

That is correct.

Sent from my iPhone using Winnipesaukee Forum mobile app

01-26-2021, 11:46 AM	#1
bigdog Senior Member Join Date: Apr 2006 Location: Central MA-Gilford Posts: 1,446 Thanks: 340 Thanked 119 Times in 96 Posts	Real Estate Tax Consequences ? I plan on selling some Real Estate, which I have owned, less than one year. Are there any tax laws consequnces I should be aware of, selling within this short amount of time. Not sure if I will have any taxable gains, until I see what price the property actually sells ? Appreciate folks feedback, thanks !

01-26-2021, 11:52 AM	#2
phoenix Senior Member Join Date: Apr 2004 Location: phoenix and moultonboro Posts: 1,551 Thanks: 60 Thanked 275 Times in 193 Posts	is it your primary residence . if not i think gain would be taxable if primary I think you need to stay 2 years to avoid the tax . I will leave it to any accts on the forum to give a better answer __________________ it's tough to make predictions specially about the future

01-26-2021, 03:08 PM	#7
MeredithMan Senior Member Join Date: Aug 2013 Location: Bedford, NH; Meredith, NH Posts: 947 Thanks: 262 Thanked 812 Times in 331 Posts	Also include the cost of improvements... ....If you've made substantial improvements to the property, (e.g., renovations, new HVAC, new roof, etc), that cost can be added to your purchase price to come up with your "basis", which is then subtracted from your sales price, to determine what your gain, if any, is. Example: original purchase price is $500K. You put in a new kitchen for $50K and a new roof for $20K. Your "basis", (cost), for tax purposes is $570K. You now sell the house for $600K. Your gain on the sale is $30K. You would obviously need all the receipts or contracts for the work done to substantiate the basis. (I assume this is still allowed, as it was in 2019 when we last sold a home). Note: consult an accountant / tax professional for proper advice!

01-26-2021, 08:42 PM	#10
Wentworth06 Member Join Date: May 2020 Posts: 30 Thanks: 37 Thanked 11 Times in 7 Posts	Short term capital gain Less than a year taxed at your regular rate. Long term as stated above is less right . I would hold out if I could to get to long term. I have been on both sides and writing the smaller check is much easier. Just my 2 cents.

01-26-2021, 01:37 PM	#4
bigdog Senior Member Join Date: Apr 2006 Location: Central MA-Gilford Posts: 1,446 Thanks: 340 Thanked 119 Times in 96 Posts	Note, this is NOT my primary residence ! As such I cannot receive any exclusion. If I have no gain in the sale, I assume there would be NO tax incurred. If a gain, would only pay on that Gain amount, the difference between what the property was purchased at, and what it sold for. Right now I believe Capital gain tax is at 15%.

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secondcurve (01-26-2021)

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01-26-2021, 03:29 PM	#8
bigdog Senior Member Join Date: Apr 2006 Location: Central MA-Gilford Posts: 1,446 Thanks: 340 Thanked 119 Times in 96 Posts	Thanks MeredithMan for the followup, greatly appreciated !

01-26-2021, 07:42 PM	#9
8gv Senior Member Join Date: Jan 2012 Posts: 2,093 Thanks: 64 Thanked 744 Times in 478 Posts	If you really want to save on taxes sell it to me at $100,000 below market.

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secondcurve (01-26-2021)