As in the residence which has been inherited, as well as is payed off. if i were to sell it, it would be wholly distinction for me. Now, to equivocate giving uncle sam his cut, I’ve been told which the sale volume contingency be invested in to an additional genuine skill so as to equivocate penalty. Now, I’m wondering if i could deposit in the certitude account of the little arrange to equivocate profitable the chastisement as well as not have to deposit in to an additional property.
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{ 6 comments… read them below or add one }
hold on to it for 2 years, then sell it. Then you won’t have to pay capital gains taxes on it.
If the property was inherited, your basis in the property is the market value of the property at the time you inherited it. If that happened recently, you may have little or no taxable gain on the sale. The reinvesting thing you were told about is called a starker exchange. It applies to like kind property only. Therefore if you sell a rental property, you must buy another rental property so a “trust fund” would not qualify for a starker exchange. In addition, for a starker exchange to work there are other requirements. You can’t take possession of the proceeds of the sale and the subsequent purchase has to happen within a certain period of time.
well, the IRS will be after you if you dont’t pay this penalty….
but, why are you guys selling???
dont you know that being owner of a property can give you bigger revenues in the future????
if this property is free and clear…. rent it!!! do not sell it…. what you can do is….. take advantage of the equity, refinance and get 100K and if you have good credit you can get a interest as low as 1%…….
DO NOT SELL, SPECIALLY IF THAT PROPERTY IS IN CALIFORNIA!!!
The capital gains exemption is only for Primary Residences if you lived there 2 of the last 5 years. The 1031 Transfer is time sensitive and must be “like kind” . Talk to a tax person or 1031 Intermediary.
Best advice is to hold on to it for investment.
No.
This is called a 1031 Exchange and requires that you invest the money in another property to avoid capital gains.
Tarl is correct, in that if you inherited the property, your “basis” is whatever the market value of the property was at the time you inherited the property. You would only pay gains tax on anything over that amount. And since properties have barely appreciated this year, if at all, at least in most areas, you’re probably not looking at any tax.
If you have some interest in parlaying this inheritance into further real estate investments, that’s where a 1031 exchange would come into play. You’ll have to search for 1031 exchange administrators and find one you want to work with. But that’s not what it sounds like you’re really looking for.
You own an inherited home free and clear. It’s all free money to you right now. So spend a little bit of it on a CPA or other tax advisor, and get some real advice, which could save you money in the long run by not screwing something up.