I didn’t think so? It used to be once lifetime but when the limit was raised in the '90s I thought it was also changed to allow this for primary residence every 5 yrs or something similar.
Yes, it was, sorry. But what’s your objection again? I said almost exlusively a rich person’s problem. You seem to agree that most people don’t have to pay the tax, and that when they do, it’s because of the big gain. Are we really disagreeing?
I thought it was once a lifetime but I could be wrong. It does seem like every 5 years would be kind of overkill though.
I often ask myself that about you. :)
When I see the super rich hire full time cooks, maids, drivers, whatever – I get it. It’s saving them time. Who wouldn’t want to able to do work or watch Netflix in the backseat instead of driving, 100% of the time. I’
But how can you possibly use 10 yachts. Even with one yacht it’s probably doing nothing 90% of the year. She must hire people just to manage all her yachts!
Well I assume some Congress folks probably want to float around on a $40M yacht with their buddies. What better way to advance her shitty agenda than keeping her friends with political power happy?
@scuzz the homeowner capital gains exemption can be used if youve lived in the house for 2 of the 5 years prior to selling it. It’s no longer a one time thing.
Nice to know. At that point it might as well be totally non-taxable though since you could write-off renting it out for the other three.
I’m not sure how that works. I own a rental house now. We bought it new and my tax person takes a depreciation expense off of the income every year. I vaguely think that when I sell it I’ll have a tax consequence for that, but I confess I don’t know what it is. It’s possible we’ll move into the house one day, but not certain.
I am not sure but yes, I think if you sold it you would have a tax consequence. With a rental you just get the year to year advantage of getting to expense out the house and any repairs you make to it. But with business property it does start to get complicated.
I have avoided rental property after watching my brother mess with it. He had three properties at one time and it sure seemed like a lot of work for really very little back. I would hate that 10pm call that something was wrong. I guess that’s why you get a property management company.
One partnership i am in deals in renting warehouses and we use a property management company for that.
And I am not sure how the 2 out of 5 years thing works if you rent it say for 5-6 years and then move into it. You may just have to live in it for 2 years after that for it to kick in.
Interesting timing this conversation came up actually! So i looked at the tax law and it looks like to not get extra taxes on profits from selling your property it must have been your primary residence for at least 2 out of the last 5 years.
We moved out in 2015 and had been renting it out (for a profit) ever since. However, there is a real possibility we may be moving from Orlando, FL (cheap housing) to the Greater Boston Area (lol housing prices) and we’ve been thinking we would sell that house before the move and use the profits for a downpayment on a house up there.
Just got a text from my tenants that they are leaving, and since this year we would be in that 5 year period but next year we won’t I think selling now means not paying the extra taxes on the capital gains from it but next year that not being the case.
I need to talk to an accountant to get it figured out heh.
You can also avoid the taxes if you sell the property and move the money into commercial property within a set time frame. I am not sure of the specifics but this was something my brother looked into a few years ago.
I believe you are thinking of 1031 exchange. This basically allows you to move the proceeds from a rental property into another rental/commercial property of greater value and defer any taxes. There are a bunch of rules, strict time deadlines 45 and 180 days and you have to use an intermediate to handle the exchange. (Many brokers can do it.). You can’t do it with a primary resident.
I think you are almost always better off to take advantage of the 250/500K capital gains exemption than try and hassle with an exchange.
Who could have predicted this? Give the people with all the negotiating power more money, and they will have… more negotiating power!
Think how much trickling down is just around the corner!
That chart looks like a chart from a satirical skit.
Every time I run my taxes, I did it again today using the IRSs tools on their site, I owe $4000 more on the same income as last year.
That makes me angry.
If only you were a rural, uneducated, white guy who votes with his wallet.
For what it’s worth, I’m in the same boat as you, but it’s even worse.
I don’t see how anyone who makes less than 300k a year saves money with this. When they eliminated the exemptions they effectively raised your taxes by $1000 per person in your family.