Quote:
Originally Posted by fortyniners  Hi,
I currently own a home in California and would like to sell it. I know if I have lived there for atleast 2 years in the past 5 years, I could avoid tax on $500,000 (married, filed jointly) but I have lived in that house for only 4 months in the past 5 years. I would like to get some advice on the ways to avoid capital gains tax. I don't mind holding on that property for a few more years if there's a way to avoid capital gain tax on it. Thanks in advance.
Sreekanth |
I guess no other way for you UNLESS youhave lived in the house for at least 24 months in that 5-year period. You can use this 2-out-of-5 year rule to exclude your profits each time you sell or exchange your main home.; Gain on the sale of your primary home is reported on Sch D ? form 8949as a capital gain. Sicne you owned your home for more than one year, the gain is reported as a long-term capital gain.Unless your marginal tax is 15% or lower than 15%, your LTCG tax rate ?s be 15% on your LTCG.
Note; you may convert it as either investment/ biz pty for 1031 exchange; in general, the 1031 exchange allows you to trade real estate held for investment for other investment real estate and incur no immediate tax liabilities. Under Section 1031, if you exchange business / investment property solely for business or investment property of a like kind, no gain or loss is recognized until the newly acquired property is sold.
The new property that you intend to receive in exchange for your existing property must be identified in writing within 45 days of the first transfer. The like-kind property must be received by one of these two dates (whichever comes sooner): within the 180-day period following the property transfer, or by your tax return due date (including extensions) for the year in which you transferred the property.
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