Capital Gains Tax
I bought a pre-construction condo early this year for $350k. I only put in $30k to reserve the condo. The building would not be ready until early next year. One of the condo in the same building sold for $600k this month. The agent asked me If I want to sell the condo at that price. This will mean a cap gain of about $250k at the time of closing. Since I would not own the property for more than a year the taxes will be calculated as short term investment. What options do I have to defer the cap gain? Is 1031 even an option as the unit will never be on my name?
Please help. Thanks
The 1031 Exchange is not an option since you do not own an interest in real estate. You would actually be selling a contractual right to purchase the condo, not selling a real estate interest.
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Would this be treated as like "option purchase" and the clock to determine whether this is a long term investment will start at the time I put in the reservation deposit. In other words, if I put in the reservation deposit on Jan 30, 2004 and sell the contract on Feb 2,2005 and the property is never transferred to my name..is this really a real-estate investment or I can treat it as a long term regular investment (like buying options in stock market)?
Thanks