Well, I just came across a grand idea. Someone tell me if it has holes:
I own rental real estate, and want to get out. So Plan A is to time my retirement with the expiration of the 0% capital gains tax rates in 2008. I would retire no later than Spring of 2008 (probably March 16, the day after bonus checks are cut ), such that my 2008 income keeps me in the 15% tax bracket, and then I sell all my real estate and pay the 0% capital gains tax rate instead of 15% I would otherwise pay. I've tried to remain clear on how this works, although I know it is easy to trip up. I don't think I'll have any recapture issues since I have only been using 27.5 year straight line depreciation on all my real estate.
15% of my real estate gains would be somewhere around $15,000 - $20,000, enough to be motivated by this plan. Unless the gain itself is counted in determining my tax bracket. I am not clear on that.
My plan B (if plan A feels too aggressive) would wait until Spring 2009 or 2010, sell the real estate, and pay tax at the 5% tax rate.
I just heard today that my condo association may take a vote to disallow renters, so I may be forced to sell that one regardless of Plan A or B.
I own rental real estate, and want to get out. So Plan A is to time my retirement with the expiration of the 0% capital gains tax rates in 2008. I would retire no later than Spring of 2008 (probably March 16, the day after bonus checks are cut ), such that my 2008 income keeps me in the 15% tax bracket, and then I sell all my real estate and pay the 0% capital gains tax rate instead of 15% I would otherwise pay. I've tried to remain clear on how this works, although I know it is easy to trip up. I don't think I'll have any recapture issues since I have only been using 27.5 year straight line depreciation on all my real estate.
15% of my real estate gains would be somewhere around $15,000 - $20,000, enough to be motivated by this plan. Unless the gain itself is counted in determining my tax bracket. I am not clear on that.
My plan B (if plan A feels too aggressive) would wait until Spring 2009 or 2010, sell the real estate, and pay tax at the 5% tax rate.
I just heard today that my condo association may take a vote to disallow renters, so I may be forced to sell that one regardless of Plan A or B.