I sold my condo! Here's my story.

[ElaineMonster]

[ QUOTE ]
[ QUOTE ]

1. Near UNLV. In fact, the buyers were parents buying it for their son to go to school.


[/ QUOTE ]

Wow, someone bought a condo for their kid just because he was going to school? Why not have him live in the dorms? Just curious and interested

[/ QUOTE ]

It's actually becoming more and more common. I had friends in college whose parents did that for them. It's particularly common among grad students.

But... We don't know that's who bought it and why. Ed is making assumptions. We don't know anything about the buyers except their names and that they paid on time [img]/images/graemlins/smile.gif[/img] Well, and that they were really, very cool. They actually paid ahead of time!

I'm also, obviously very happy with my realtor. He did an excellent job.

[krishan]

You probably don't owe any taxes on the 10K. The capital gains exemption for living in your house for 2 years is prorated for the length of time you spent in the house. So if 2 years is good for 200K living there 1 year should be good for gains up to 100K.

Krishan

[SomethingClever]

[ QUOTE ]
You probably don't owe any taxes on the 10K. The capital gains exemption for living in your house for 2 years is prorated for the length of time you spent in the house. So if 2 years is good for 200K living there 1 year should be good for gains up to 100K.

Krishan

[/ QUOTE ]

This is different from what I've heard.

I thought it was something like 2 years, 500k is exempt. Anything under 2 years is all taxable UNLESS you buy another property as a residence within a certain amount of time.

Correct me if I'm wrong.

[cdxx]

[ QUOTE ]
[ QUOTE ]
You probably don't owe any taxes on the 10K. The capital gains exemption for living in your house for 2 years is prorated for the length of time you spent in the house. So if 2 years is good for 200K living there 1 year should be good for gains up to 100K.

Krishan

[/ QUOTE ]

This is different from what I've heard.

I thought it was something like 2 years, 500k is exempt. Anything under 2 years is all taxable UNLESS you buy another property as a residence within a certain amount of time.

Correct me if I'm wrong.

[/ QUOTE ]

you have something like 2 years to buy the new property.

[Sifmole]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
You probably don't owe any taxes on the 10K. The capital gains exemption for living in your house for 2 years is prorated for the length of time you spent in the house. So if 2 years is good for 200K living there 1 year should be good for gains up to 100K.

Krishan

[/ QUOTE ]

This is different from what I've heard.

I thought it was something like 2 years, 500k is exempt. Anything under 2 years is all taxable UNLESS you buy another property as a residence within a certain amount of time.

Correct me if I'm wrong.

[/ QUOTE ]

[ QUOTE ]

you have something like 2 years to buy the new property.

[/ QUOTE ]

The tax-free $250,000 ( $500,000 if married ) is not an all or nothing. It can be prorated for less than 2 years of occupancy. I do believe there are some conditions that have to be met in order for this to happen though.

I don't believe there is anything at all about it being tax-free if you purchase another residence within two years. You might be confusing this with 1031 exchanges which are something else and a bit complicated.

You can only invoke the tax-free sale if you haven't invoked the tax-free sale in the past two years.

[krishan]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
You probably don't owe any taxes on the 10K. The capital gains exemption for living in your house for 2 years is prorated for the length of time you spent in the house. So if 2 years is good for 200K living there 1 year should be good for gains up to 100K.

Krishan

[/ QUOTE ]

This is different from what I've heard.

I thought it was something like 2 years, 500k is exempt. Anything under 2 years is all taxable UNLESS you buy another property as a residence within a certain amount of time.

Correct me if I'm wrong.

[/ QUOTE ]

[ QUOTE ]

you have something like 2 years to buy the new property.

[/ QUOTE ]

The tax-free $250,000 ( $500,000 if married ) is not an all or nothing. It can be prorated for less than 2 years of occupancy. I do believe there are some conditions that have to be met in order for this to happen though.

I don't believe there is anything at all about it being tax-free if you purchase another residence within two years. You might be confusing this with 1031 exchanges which are something else and a bit complicated.

You can only invoke the tax-free sale if you haven't invoked the tax-free sale in the past two years.

[/ QUOTE ]

This is correct if strangly quoted. The whole buy a new house to not pay taxes on capitol gains thing was the old laws.

Krishan

[ElaineMonster]

We spoke to our accountant before the condo closed and asked specifically:
-Should we mingle these funds with other funds for tax purposes?
-Is there any way to not pay capital gains taxes on it?

And his response, and I trust him, was that we can go ahead and mingle the money because it will be taxed. The only way out of the taxation would be to put the money in an escrow account, specify three properties to purchase with it, buy one of the three within 4 months. All that to save $3000 in taxes. (The rule is that the income has to be "realized" and since it's kept in escrow and reinvested into another property, it's never realized.)

Well, I'm not ready to pick three houses yet. The timing isn't perfect. And I have faith we can save $3000 by having more flexibility in our house choice.

Also, the capital gains tax is relatively low these days compared to the regular income tax. So, for all intents and purposes, we saved money simply because the tax rate now is lower than it will be in the future since we aren't living in it and won't live in it for the required 2 year period(15% now, will likely be back up to 20% later).

Also, we haven't asked our accountant yet, but I don't think we can pro-rate it for the time I lived there. From what I've read, my absence has to be for a specific reason, like a change of job, health, or unforeseen circumstances. None of those apply.

I think it's funny how people will gladly pay their real estate agents and their lenders outrageous fees yet balk at taxation - particularly taxation that is relatively low, low because of reason (capital gains tax is lower than income tax) and low because of the times (Tax Relief Act cut capital gains taxes from 20% to 15%).

[Sifmole]

[ QUOTE ]

The only way out of the taxation would be to put the money in an escrow account, specify three properties to purchase with it, buy one of the three within 4 months. All that to save $3000 in taxes. (The rule is that the income has to be "realized" and since it's kept in escrow and reinvested into another property, it's never realized.)


[/ QUOTE ]

What your accountant was describing here is a 1031 Exchange. You are correct that is it complicated and not something you should likely get involved in if you are not really investing in real-estate.

[ QUOTE ]

I think it's funny how people will gladly pay their real estate agents and their lenders outrageous fees yet balk at taxation - particularly taxation that is relatively low, low because of reason (capital gains tax is lower than income tax) and low because of the times (Tax Relief Act cut capital gains taxes from 20% to 15%).

[/ QUOTE ]

I don't think gladly is the word. Alot of people are resigned to paying them because they believe they can't negotiate them. People basically try and control what they can, and resign themselves to what they cannot. When there are laws and specifically written rules on how to avoid a cost people will generally try it. When they have to figure out methods themselves they often don't do it.

[ElaineMonster]

[ QUOTE ]
When there are laws and specifically written rules on how to avoid a cost people will generally try it. When they have to figure out methods themselves they often don't do it.

[/ QUOTE ]

Yeah, I'd have to agree.
By the way, we negotiated our agent's commission and got the buyer to pay all the closing costs too [img]/images/graemlins/smile.gif[/img]

We're shopping now for a home and it's just insane the crazy things people tell us! I'm so glad we have the web now and can find out when someone is full of it or when they're telling the truth.

My current favorite tools for home hunting are: realtor.com, hbmnet.com, and wikibroker.com, along with the county assessor's website, mapquest, and google earth. Right now, this is my full time job and I am loving it!

We've met a lot of nice people and one terribly rude agent. See, we started by calling up seller's agents of homes we were interested in looking at - mostly to get a feel for the market and to see what neighborhoods we liked best. My plan is to look at A LOT of houses. The agents have a legal responsibility to show their houses to interested parties. But, they'd rather you sign up with them to be your buyer's agent or they'd rather not work very hard and have someone else show you the property (your own agent), because they're onto us and know we're just scouting, not seriously interested in buying yet. But who knows, we're regular people and could just fall in love with something, so they really should take the opportunity to show us.

Anyway, this one guy was really rude. When we scheduled the appointment he gave me the wrong address. When I asked if it was in a certain subdivision, he answered "no" but it was. When I got there and realized he gave me the wrong address (found the house by noticing the for sale sign in yard and comparing pictures) and that it was in the subdivision he said it wasn't in, I called him up and cancelled the appointment - I had already seen that property and wasn't interested. He lectured me about wasting his time. I was mad (since my call saved him time - I could have just looked at the house and then told him I wasn't interested) so I just hung up on him. HE CALLED ME BACK! He proceeded to lecture me some more!

I hung up on him again and almost immediately ran to the agent who sold my condo. We made a deal and now he speaks to the agents for me. He's totally cool with our method of shopping and I trust him to work hard for us to get us a good house at a good deal (because he's working for basically a flat fee).

I don't know why I just said all that... anyway, house hunting is an interesting process.

[krishan]

[ QUOTE ]

We spoke to our accountant before the condo closed and asked specifically:
-Should we mingle these funds with other funds for tax purposes?
-Is there any way to not pay capital gains taxes on it?

[/ QUOTE ]

I don't know what to say. My information comes from an accountant also. I guess we should both double check.

Krishan