capital gains tax?

Question

if you live in your house for 2 years and sell it, you get 250,000 tax free, and up to 500,000 tax free if your married. but thats for your primary house.

what if i have investment houses. how long do I have to keep them to sell them tax free?

can you use a 1031 tax exchange on investment properties? or is that only for your primary home?

everyone says, your primary home gets taxed more, but investment get taxed less, so wheres the tax benifits for investments?

Answer 1

HELLO
WHAT FANTASY ARE YOU LIVING IN?
AND UNLESS U MAKE MILLIONS?
AS WELL AS A COMPUTER ANNALIST,
AND OTHER STUFF, I OWN
NOTHING..BUT BUY IT RESELL IT FOR 100%
PROFIT.
ITS CALLED RECYCLING.
NYS IF YOU LIVE IN A HOUSE FOR 2 YRS TAX DEPR
WOULD BE 10% OF YOUR TOTAL INCOME.
BEST

Answer 2

Not sure why anyone would say primary home gets taxed more -- is not true.

You are right about the exemption of gains on the primary residence. 1031 and capital gains apply to either a pure investment property or to the excess proceeds of a residence sale.

Capital gains rates apply to whatever you keep of any capital gains not exempted by the residence rules. Make very sure you hire your qualified intermediary for the 1031 before you ever touch the money (or else there will be no 1031).

Deferring capital gains makes a lot of sense for those who plan to cash out for retirement, or if your annual income may ever fluctuate dramatically. This is because capital gains taxes (currently anyway) are not a straight percentage. They depend on your total taxable income. Over $100K, 15%, under $100K, 5%. Cash out while you are 55 and making $100K per year and you will get hit with 15%. Wait and cash out $80K in a year when you only make $10-20K, and you will pay 5%. This assumes tax rates do not change. If a dem takes the presidency and congress, expect change. I am letting it ride for now, but I'll cash everything out within two years (hopefully one) of dems in charge of both branches.

Hope I've helped.

Answer 3

If an investment home was occupied as your principal residence for 2 of the 5 years prior to the sale you could still claim the exemption for that as long as you hadn't claimed it within 2 years of the sale date. You would still have to pay tax on the depreciation allowed or allowable for the time that it was rented out.

You can use a 1031 exchange for the exchange of ANY business property. This only defers the tax on the gain, it does NOT exclude it from taxation.

The tax rate on all long term capital gains is normally 15%, whether it's a business property or principal home. Everything else being equal, you'd pay higher tax on the investment property due to the recapture of depreciation allowe or allowable. Therefore it's not true that your principal residence is taxed more than investment property.

Answer 4

The 1031 is only for investment property. You then have to "exchange" your property for a different investment property. In a 1031, the taxes are deferred (you will still pay taxes eventually).

You will never be tax free on selling an investment property.

Answer 5

taxes on investments are higher, interest payment is higher and you will pay cap gains on them, not on primary residence. you can use 1031 exc on investment properties. there are no tax incentives for investments, the investment and appreciation is the benefit.

Answer 6

For capital gains you need to live in your primary residence for two years. Your investments are not going to be allowed to be sold tax free. You owe the state for those investments. They are kind enough to give you a tax break for living in your primary house for two years and would (if caught) be in trouble for fraud, tax evasion and those are big time felonies. Why would you want to do that to yourself?