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Old 01-26-2021, 11:46 AM   #1
bigdog
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Default 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 !
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Old 01-26-2021, 11:52 AM   #2
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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
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Old 01-26-2021, 12:39 PM   #3
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Quote:
Originally Posted by phoenix View Post
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.
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Old 01-26-2021, 01:37 PM   #4
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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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Old 01-26-2021, 01:39 PM   #5
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Default Real Estate Tax Consequences ?

Quote:
Originally Posted by bigdog View Post
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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Old 01-26-2021, 02:37 PM   #6
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Quote:
Originally Posted by joey2665 View Post
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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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 !
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Old 01-26-2021, 03:08 PM   #7
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Default 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!
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Old 01-26-2021, 03:29 PM   #8
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Thanks MeredithMan for the followup, greatly appreciated !
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Old 01-26-2021, 07:42 PM   #9
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If you really want to save on taxes sell it to me at $100,000 below market.

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Old 01-26-2021, 08:42 PM   #10
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Default 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.
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Old 01-26-2021, 10:36 PM   #11
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Quote:
Originally Posted by bigdog View Post
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.

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