Is It Short Or Long Term Capital Gain
I was assigned a contract on a condo unit in Dec 2004.
The construction will be completed on Aug 2006
and I would have to close on it at that time.
I would like to sell it around the closing(if possible) or
asap after that.
When I sell this unit, will my capita tax gain/loss be considered Short or Long term?
I would appreciate any responses.
Thanks.
Sell/Assign the contract in Aug 2006, your profit is a long term capital gain.
Close on the property and sell immediately thereafter, your profit is a short term capital gain.
I think if you close then sell asap, any gain realized would be taxed as ordinary income.
I just spoke with my accountant who confirms the same - ordinary income tax rates apply. He basically said that by paying the mortgage on a property for a year, I would be coming out ahead if I sold after 1 year and 1 day.
Wait...I thought any flips that were pre-constr were considered dealer dispositions? So, if flipped before closing, how would it classify as long term cap gains?
I have input from a few CPAs saying selling 1 day after closing once you owned the contract for at least hte 12 months prior, long term cap gains can be defended since the property was essentially bought 12 months and 1 day ago.