i currently own a house that i put up for rent several years ago. about 4 people came in and out.-?

Question

So all in all I wanna sell this rental in the bay area to get some money to invest in a house in Folsom. But I heard from a friend that you cannot use money that you got from a rental house to get a new house. Is this true??

Answer 1

No, that's not true. You can use the money for whatever you want. Maybe you friend was thinking about 1031 exchange which is a tax sheltering rule that allows you to exchange like property, but that won't apply to if you just sell the property.

Answer 2

Your friend is the wrong person to ask.
You can use the sale of any house to buy another ....just do it right.

If you lived in the house 2 of last 5 years your profit is capital gains exempt up to 250,000 for each owner (so if you're married it would be 500,000K cap gains tax free)

If you didnt live in for 2 of the last 5 yrs then you need to look at doing a 1031 exchange to defer taxes.

You can sell whatever property you want and buy what ever you want.....its just the tax implications of your transactions you need to think about.

Where is your rental in the bay area?
I am also in bay area and have rentals N of Sac.

It may not be the best time to sell. Good to buy though.
Consider what you may owe and if you have the equity to keep it and continue using as a rental and still buy your home in folsom.

We have a bay area advisor should you have any questions about the options.

Good Luck!

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Answer 3

2

Answer 4

Do a 1031 tax exchange. Set it up BEFORE you sell the house.

You own a rent house that you want to sell. A 1031 is for the purpose of deferring the tax liability. You are "exchanging" one house for another - technically you're not cashing out from your rental house - you re-invest it into another house. Now, you can move in to the new house and after you've lived in it for 2 years you can sell it and pay no capital gains up to 250k if filing single or 500k if jointly.

Answer 5

If the property you are thinking of buying in Folsum will be an investment property you will want to look in to doing a "1031 Exchange" which will defer any capital gains taxes you incur from the sale of the old property. Ask a local Realtor or Title Company to recommend an exchange accommodate who will explain the process in full. You can also do a search on the web under 1031 exchange. You should also consult with a tax adviser before proceeding.

Answer 6

I think your friend is confusing the profit from the sale. If it was your primary residence (not a rental) up to $250,000 in profit would be sheilded from capital gains taxes. Since it was a rental property, it probably isn't unless you actually lived in it as your primary residence for 2 of the last 5 years.

Answer 7

Nope. A house is a house, whether you rented it, dealt drugs out of it, hell burned it to the ground. As long as you sold it, it would be sold and you could do whatever you wanted with the money. I think what your friend may be referring to is a VA Loan. If you have a VA loan the VA don't want you renting out your house for profit. The only other thing you would have to worry about is capitol gains in regards to how long you yourself actually physically lived there. But Several years.....you should be fine.

Answer 8

Not true. You can do what you want with your money. Just consult a tax professional about the ramifications.

Answer 9

No, its not true.. You might pay more taxes but I dont see why you cant use your own money to buy a house.

Answer 10

Rent-To-Own Home - http://RentToOwnHome.uzaev.com/?lbHU