Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Tax break on capital gains narrows
Old 08-13-2008, 12:12 AM   #1
Recycles dryer sheets
Join Date: Mar 2007
Posts: 149
Tax break on capital gains narrows

As expected, a bill has been passed limiting the capital gains tax break when a rental property is converted to a principal residence for 2 years out of the 5 years before the sale for any property puchased after Dec 31st, 2008 -at least that's what I think it means

Here's part of the article from last Sat's Washington Post - google for the rest:

By Kenneth R. Harney
Saturday, August 9, 2008; Page F01

Deep in the nearly 700 pages of the new housing bill is a complicated change in the tax code that could affect substantial numbers of people who purchase second homes or investment real estate in the coming decade with an eye to occupying those homes as their main residence later.
The bill narrows the use of the code's tax-free exclusion that allows sellers of principal residences to escape taxation on the first $500,000 of their profit (married joint-filers) or $250,000 (single-filers). Under current law, sellers can claim the full exclusion if they have used a property as their principal residence for at least two of the five years preceding a sale.

That eventually caught the eye of Congress. Last year the House approved a bill that would ratchet down the rules on such transactions by distinguishing between "nonqualified" periods of rental or investment use and "qualified" periods of principal residence use. It resurfaced this year in the housing bill as a "revenue offset" -- a way to raise an extra $1.4 billion over the next decade.

Bottom line: If you plan to buy, live in or sell a second home or rental investment property after Jan. 1, be aware of the new allocation formula.
outtarentals is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
AMT and the Zero Capital Gains Tax in 2008? moperry Hi, I am... 10 03-06-2009 10:09 PM
Question on tax basis and capital gains on stock sale gettingthere FIRE and Money 15 02-09-2008 10:04 AM
L. T. Capital Gains Tax Treatment of Bear Funds? haha FIRE and Money 2 04-19-2007 12:36 PM
capital gains tax question just_hatched FIRE and Money 5 01-31-2006 11:07 PM
Capital gains Jay FIRE and Money 15 03-08-2005 07:32 AM

» Quick Links

All times are GMT -6. The time now is 12:29 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.