Posted by Gavin Wilkinson on October 19, 2004 at 23:20:02:
The capital gains are figured on your profit, not your cash proceeds. If you do a straight sale, you will have capital gains. The way to avoid the gains would be a 1031 exchange into another larger property.
The good news is that long term(greater than one year) capital gains rates are currently only 15%!
beating capital gains! - Posted by Mike T
Posted by Mike T on October 18, 2004 at 14:32:43:
When flipping a home, what is the best way to pull money out with out paying a lot in capital gains? I have a home that I will be closing on in about a month. I’m looking to have somewhere in the amount of $100K in equity. I want to be able to pull that money and sale the home and not be liable to pay 35% in capital gains. What should I do?
Thanks
Re: beating capital gains! - Posted by Bill Bronchick
Posted by Bill Bronchick on October 20, 2004 at 13:46:45:
Capital gains are 15%, not 35%, which is the personal rate. If the property was held as a capital asset (> 12 months), the gain is capital. If the property is held< 1 year, then it is an ordinary gain.
Re: beating capital gains! - Posted by David Krulac
Posted by David Krulac on October 18, 2004 at 17:01:20:
possibly a 1031 exchanges, unless you are a “dealer”.
If that’s the case then you lose the right to:
BTW capital gains is not figured on your equity only your basis. Example: you buy a $100,000 for $100,000 cash. You have $100,000 in equity. you sell it for $120,000 you have $20,000 in capital gains. The 35% braket only applies if you are in the top earning bracket, most people are lower. if that helps
3. defer taxes with installment sales contracts.
Re: beating capital gains! - Posted by Mike T
Posted by Mike T on October 18, 2004 at 22:57:22:
My mistake David, I’m looking to leave the table with $100+K profit after everything is said and done. I wrote the contract with $15K down on a new $320K house, a year later when the house was completed because of permit issues with the developer and the housing market in this area has going up. I will be able to sale it for $430K now. Is it possible to pull the money out before I sale with an ELOC, sale the house, pay off the ELOC when I sale and walk away without paying a lot in capital gains?