??? about Realestate sale(not car Related)

[YENKO DEUCE REGISTRY]

The properties are held as investments, and when sold will produce a long-term capital gain that will be taxed as income at the LTCG rate.

The expenses incurred throughout the years to maintain the properties were (should have been) used to offset the rental income, provided the rental income exceeded rental expenses in at least one year of a three year period.

The only way to avoid paying the capital gain when a property is sold is if it is your primary residence - and you roll the amount of the sale into your next primary residence. I think there's an age limit in there as well, but regardless, this provision won't apply.

[Pantera]

This is not my primary residence. But in that light is there not a one time exclusion for sale of your primary residence? I have held on to it the last 15 years planing on the sale of it to avoid the fact it may be worth a full 1/3rd more than I paid for it back in '89 when propery was cheaper. I was going to wait until I was retired and over 65 before I sold it. It may be worth as much as 4 times what the rentals are worth.


I appreciate your inpuit. Can you tell me what the amount would be on one of these houses if it was a $100,000 outright sale? I know it depends on my income bracket.

Thanks

Pantera

[YENKO DEUCE REGISTRY]

I believe the exclusion amount is related to the sale of your primary residence. If I remember correctly, the first $250k of capital gain is excluded.

I defer to Jim Hughes for the gritty details, but they have made it difficult to capitalize on the gains without paying the taxes. The current 401k's have pre-tax contributions, but are taxed when withdrawn - theoretically at the lower tax rate in effect upon retirement.

[TMagda]

Pantera,

The exclusion is on your primary residence, $250k if single, $500k if married. It is not a one time exclusion anymore. It is available every 2 years. Maybe you can sell your primary and live in a rental?

[YENKO DEUCE REGISTRY]

TMagda - thanks I'm rusty on my tax law - on purpose

[SamLBInj]

You own these rental houses outright? Would you like to borrow against them or even get full time high dollar rentals? Your actually in a pretty good situation.
Geeze I sound like an informercial

[71SSNova]

Long term capital gains is 15%. Since you have written them off over the years, your capital gains will 100% of the selling price minus the cost of repairs you have not completely written off.

As far as your primary residence, you have to declare it as your primary residence for 2 of the last 5 years and you do not have to pay any capital gains nor do you have to reinvest it in another residence. I did not know there was $$ limit as TMagda mentions.

So if you do not mind moving every 2 years you can escape paying any capital gains.

There is another approach called a 1031 exchange and a reverse 1031 exchange. This entails selling your property(s) and buying another like and similar property for more than the selling price of the other. This has to go through a lawyer or campany that holds the money for you. If you want more details on this, email me at [email protected]

I've been into rental business for 15 years and have another 11 to go so I watch this pretty close.

Best bet though is to find a good real estate attorney in the area to completely fill you in.

[Pantera]

I know about the exchange and the pitfalls it has if not done by an attorney. Sometime I have to quit buying more and divest myself of some of them. The return on them has been so bad the last 10 years that I am considering selling them and putting the money into interest bearing investments where I don't have to go mow the grass every 10 days.

I also want to build a 3 to 4 thousand sf building on the back of my home to keep the car collection in. This would keep it close where I would be able to work on them more often. The building I have now is just not big enough. I need to have it for my business and a seperate place for my work on the cars.

I hate the idea of moving every 15 yr much less every "2". I have been here since 1989. It is good to know that the money from it is mine to keep if I should sell it. I think I might be able to double my investment on it as it was a repo when I bought it.

My problem is that I like the area and it has grown so much that I could not afford to buy a different house nearby and come out with enought to build the building as big as I want on the back. I only live 1 mi from where the Powertour stopped here in Tulsa two years ago. Mine is the smallest house in the neighborhood at 4,800 sf. Everything that I have looked at is more expensive or larger and/or doesn't have a lot big enought for the new building.

If I move I want to downsize to 2500-3000 sf with 1 acre lot. That is something that is just not avaiable around here.


I want to thank you and I do appreciate your inpuit.

Pantera

[Pantera]

If I was younger I would be real interested in growing them and refinancing them. But, as I am nearing retirement and really want to scale back my work load from now on, I really want to set back and not have to worry about making a payment again. I have worked for them for a lot of years and now it is time for them to work for me. I just need to decide which is the best avenue to persue.

I want to just take it easy like Charlie does.

I know I will never be in his leage but I don't owe anybody and the next two years are going to be devoted to getting around to all the little things I have been putting off.

Especially the Motions and my Pantera

Thanks

Pantera

[YENKO DEUCE REGISTRY]

Sell the properties, pay the tax, and invest the money in a mixed bag of investments like Roth IRA's, etc.... If you are in business for yourself, you may have opted for the self employed version of the 401k plan (?)