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02-02-2006, 05:55 AM
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#1
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Full time employment: Posting here.
Join Date: Jan 2004
Posts: 851
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Home sale strategy
Just thinking out loud here....and need some better facts.
My house, 100% paid for, I could likely sell for about $1M+ which would give me about 650Kin capital gains....
If I sell I'd like to by two houses to replace the one...one in a cheaper location, i.e. a rural farming community...maybe buy a house for $250K. I'd also like to buy another house in the Carribean and spend upto 4 months per year there...this would probably cost 500-600K.
I know you only owe cap gain tax on your house when you don't roll the profit into another place...so if I took the "profit" from the house and bought the vacation place, and the original investment part (i.e. what I paid for the house in the first place) and bought the new farm...could I avoid most of the taxes?
Any obvious flaws in this plan?
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02-02-2006, 06:29 AM
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#2
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Recycles dryer sheets
Join Date: Sep 2005
Posts: 101
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Re: Home sale strategy
If you are married there is no cap gain on your home up to 500K if you have lived there 2 of the last 5 years.
You can no longer roll your cap gains into a more expensive home to save cap gain.
Jim
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02-02-2006, 06:36 AM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2004
Posts: 1,719
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Re: Home sale strategy
Quote:
Originally Posted by burch64
If you are married there is no cap gain on your home up to 500K if you have lived there 2 of the last 5 years.
You can no longer roll your cap gains into a more expensive home to save cap gain.
Jim
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I wonder how this is going to affect the Boomers who are looking to retire in the next few years and have paid-off houses in areas like Southern/Northern California, New York and D.C.
__________________
He had one of those rare smiles with a quality of eternal reassurance in it . . . It faced, or seemed to face, the whole external world for an instant and then concentrated on you with an irresistible prejudice in your favor. -- The Great Gatsby, F. Scott Fitzgerald
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02-02-2006, 06:50 AM
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#4
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Full time employment: Posting here.
Join Date: Jan 2004
Posts: 851
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Re: Home sale strategy
>>You can no longer roll your cap gains into a more expensive home to save cap gain.
Now that I *didn't* know....so its not a once-in-a-lifetime exclusion?
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02-02-2006, 08:07 AM
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#5
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Recycles dryer sheets
Join Date: Sep 2005
Posts: 101
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Re: Home sale strategy
You can sell your home every 2 years and avoid cap gain subject to the 500k limitation.
If you have lived in your home at least 2 years and sell it you do not even have to declare the sale on your income tax forms.
Jim
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02-02-2006, 09:15 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Re: Home sale strategy
Quote:
Originally Posted by Jay_Gatsby
I wonder how this is going to affect the Boomers who are looking to retire in the next few years and have paid-off houses in areas like Southern/Northern California, New York and D.C.
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They're going to pay capital gains on the excess. Which isnt exactly a death sentence for someone making >500k in gains on a principal residence sale!
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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02-02-2006, 10:18 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Oct 2005
Posts: 2,713
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Re: Home sale strategy
Make sure you take into account the cost of any major improvements you did after purchase.. that will bring the CG down.
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02-02-2006, 01:12 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Mar 2004
Posts: 2,343
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Re: Home sale strategy
__________________
I look to the present moment because that's where I live my life.
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02-02-2006, 01:18 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
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Re: Home sale strategy
Yep, the following two thoughts:
"Nasdaq 3000...thats probably as far as it'll drop, more or less.."
and
"Wow, Nasdaq 2000 is amazingly cheap, I should buy more...the bounce cant be that far off".
Resulted in a very helpful situation with regards to future capital gains...for the last 5 years...and for about 5-7 more...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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02-02-2006, 02:54 PM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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Re: Home sale strategy
Used the last of mine on the 2004 return.
__________________
Have Funds, Will Retire
...not doing anything of true substance...
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