sold real estate
2007-05-16 16:32:39 · 7 answers · asked by Tony P 1 in Business & Finance ➔ Taxes ➔ United States
If the home was your principal residence for two of the last five years, then you can reduce capital gains by taking the exclusion for principal residence. This is $500K ($250K if not married).
If the real estate is not your principal residence, but you live in it as your principal residence for two years before you sell it, then you get the exclusion for principal residence. If you owned a multi-unit dwelling, you could get an exclusion on the unit you occupied.
If the real estate was an investment, then you can minimize capital gains taxes by at least holding the property for more than one year. You need to keep track of the costs of buying the property, the costs of selling the property, the original cost to you, and any improvements you made to the property. That way you will have the largest basis possible and the smallest amount realized from the sale, making your gains as small as possible.
If this is a business property, you can defer, but not eliminate, capital gains tax by doing a like-kind exchange for another business property (1031 exchange).
2007-05-16 16:56:31 · answer #1 · answered by ninasgramma 7 · 1⤊ 1⤋
The time for planning is generally before you make the sale. As has been mentioned, if this is a personal residence, you're probably ok. If it's investment property, make sure you have every expense ever paid toward upkeep, improvement, etc.
The other thing to consider is whether you have any other capital assets that might be sold or disposed of at a loss. Worthless stock is one to consider. The capital loss from this could offset some of the capital gain from the real estate.
2007-05-17 08:36:24 · answer #2 · answered by Rene F 2 · 0⤊ 0⤋
Deferring the gain with a 1031 exchange is only possible if you set it up BEFORE you sell the property. Talk to a realtor, accountant, or lawyer who specializes in these.
Otherwise, it's all about basis: make sure you've included everything you've spent on the property.
It also may help to reduce your regular income for the year, since the capital gains rate is less for people in the 10% or 15% (or 0%) bracket.
2007-05-16 17:22:41 · answer #3 · answered by dj 3 · 1⤊ 1⤋
Buy another property, dig up old reciepts on ANY improvements made to the residence while living there, talk to an accountant in some situations you may not be responsible for paying capital gains taxes.
2007-05-16 16:38:37 · answer #4 · answered by Lily 7 · 0⤊ 1⤋
If you already sold it; Nothing.
The only way to defer taxes on investment property is to do a "1031 Exchange" for another piece of property and that all must be set up before the sale.
If you received cash, there is nothing you can do.
2007-05-17 01:50:17 · answer #5 · answered by Wayne Z 7 · 0⤊ 1⤋
Its too late now. Short term capital gains are taxable as ordinary income - didn't you know that? Your renovations are not tax deductible either, though they might change your house cost basis when you eventually sell.
2016-05-20 16:23:55 · answer #6 · answered by ? 4 · 0⤊ 0⤋
The first 250K of gain on your personal home is not taxable (500K for married ppl). Other than that, look for proof you improved the property - ie you put on a new roof and garage door or air conditioner etc.
If its land and was encumbered by a loan, than look for unamortized loan costs (talk to your banker).
2007-05-16 16:39:41 · answer #7 · answered by Gooch 2 · 0⤊ 2⤋