Help With Capital Gains

Comments(9)

• 
  InActive_Account28th October, 2003

  Yep, lots of ideas.
  
  How long have you owned the property?
  
  Give some more details, and I'm sure we can brainstorm...

• 
  sammiecat28th October, 2003

  I have had the house since March 2002. It is in Michigan, selling for 140K. I haven't lived in it...just a rental. What else can I tell you?

• 
  flacorps28th October, 2003

  If you want cash out, you're going to pay tax.
  
  If you want to invest in another property, you need to quickly structure a 1031 exchange through a qualified intermediary so that you find another property within 45 days of closing and close on the new one within 180 days and your hands never touch the money--hence no taxable event.
  
  Nuff said.

• 
  pbs128th October, 2003

  touch the money pay the tax.
  
  never touch the property money use the qualified Intermediary and allow them to take control of the proceeds from the sale.
  
  Once you Identify the property with in the 45 days and close with in the 180. dont wait until the 179th day to close let the QI do all the monetary transfers. If you put the money in a relatives account you WILL GET POPPED.

• 
  SolutionsKid28th October, 2003

  Can't you receive the money then gift it to a relative as long as it's under a certain amount. That way it's not taxed. Then the relative could gift money back to you, etc.
  
  The Solutions Kid
  [addsig]

• 
  InActive_Account28th October, 2003

  Quote:
  On 2003-10-28 16:20, SolutionsKid wrote:
  Can't you receive the money then gift it to a relative as long as it's under a certain amount. That way it's not taxed. Then the relative could gift money back to you, etc.
  
  
  I believe this is how it works. If you receive the money, you will have to pay the taxes. True, you can gift to any individual up to $11,000 per year without having to file a gift tax return, but if you sell the property you will still have to pay the gains on it.
  
  Analogy: Say you own stock. You can gift that stock to an individual, and if the value of that stock is under $11,000, no gift tax return. Or, you can sell the stock, and gift the individual the money. I believe if you gift the stock outright, you do not pay gains or losses on the stock, your basis is simply transferred to the giftee. But if you sell the stock and gift the cash, you pay gains/losses on the stock.
  
  Not very strong w/ gift taxes, but I believe this is correct.
  
  [ Edited by rentalman on Date 10/28/2003 ]

• 
  DaveT29th October, 2003

  You are right. Gifts of money are made with AFTER tax dollars.

• 
  kevinpop29th October, 2003

  I agree- a 1031 Starker Exchange is the best way to shelter your money...just upgrade to a larger home....re-fi after a year or so...

• 
  DaveT29th October, 2003

  Quote:I am selling an investment property and want to find a way to avoid paying the capital gains on it.
  
  Any ideas??
  sammiecat,
  
  There are a few ways to reduce or eliminate your capital gains taxesSell the property for a capital loss.
  Sell the property for its "book value". Book value is your cost basis minus depreciation. This gives you a zero gain or loss.
  Sell the property for a profit. Sell some other capital asset(s) for a loss. Net your capital gain against your capital losses such that you "break even", hence no capital gains taxes.
  Exchange your property for another investment property in accordance with the provisions of section 1031 of the tax code.
  Donate the property to a qualified charity. Take a charitable gift tax deduction for the Fair Market Value of the property. No capital gains, and your entire profit is included in your tax deduction.