Capital Gains-How To Off Set It...
Hi everyone!
We just recently sold our second home for $550k and made 200k on it (less than 2 years.) Some recommended us buying another propety for the same amount to off-set the gains. Is this advice right, if so, can we buy a commercial property for the same amount? Or do we have to buy another second home. Thanks for your help.
Your advisors are somewhat right...what you would want to do is a 1031 exchange, although, it may be too late to offset the capital gains on the sale. You need to find a lawyer or accountant, or some professional that specializes in 1031s to see if you can still pull it off...
Otherwise, just buying another property without going through the 1031 formalities won't help at all with the capital gains taxes.
1031 is a good deal, but you're too late, as you have to set it up before you close on both ends. But, as others have pointed out, at least no one's ever gone broke paying taxes on their profits...
Sorry, but the previous suggestions are incorrect. A second home is not eligible to participate in a 1031 exchange.
Your profits are taxable long term capital gains, regardless of how you may choose to reinvest the sale proceeds..
Thanks Everyone! Unfortunately the in-laws already took the proceeds and I bet it's going to be hard to get money back for the cg tax Word of advice - don't let your in-laws use your name to buy a property...