Posted by Dr. Craig Whisler CA on July 01, 2002 at 13:19:13:
specify any minimum distance for the move. Isn’t that nice?
Regards, doc
Doc, what’s IRS section 121 income? (nt) - Posted by Jerry Freeman
Posted by Jerry Freeman on June 30, 2002 at 19:17:13:
jf
It is a lesson in financial success, and … - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on June 30, 2002 at 20:24:26:
…creative thinking. For those who don’t take JM’s newsleter I might mention that it is not really necessary to stay two years to qualify for this wonderful, total exemption on up to a half million dollars of profit, from fedral taxes as most people still seem to believe.
Accordion to, I believe subsection C, of sec 121, there is an exemption for people who move because of job changes. This means you can live in and possibly rehab your primary family residence for say 3 months, then if you sell it and 'have to 'move into another residence, for job change reasons (meaning you buy another residence to rehab), you can appearently prorate your 121 tax exemption. Three months is only one eigthth of your 2 years so you can take one eighth of your $250,000 or $500,000 exemption as the case may be. Frankly I can live OK on only $20,000 per month (tax free). Jack really does have a great newsletter. Maybe some of you ought to try it.
If you are willing to become modern day gypsies and live in a state with no income tax you can live free of state and federal income taxes as long as you want to, and legally too. Not a bad way for young couples or singles to get a real jump-start on their financial future. It isn’t right for everyone because they wouldn’t want to pull their kids out of school 3 times a year. On the other hand it makes homeschooling a lot more attractive. I’m not saying you should do this forever but if you just did it for a couple of years when young and funded your Roth IRA, then placed ‘options’ on your next few houses in it, well, move over Bill Gates.
Regards, doc
Re: It is a lesson in financial success, and - Posted by Glenn-TX
Posted by Glenn-TX on July 01, 2002 at 07:59:59:
One caveat - from my brief search it appears that this exemption can only be exercised once in every two years. But it still looks like a great tool! If nothing else, just make sure your home sellers utilize this when they have to relocate and you are lease-optioning or flipping their house (stick-built). Perhaps they will consider you a RE guru. :o)
Ops… - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on June 30, 2002 at 21:29:16:
…placing options on your own houses in your IRA might be self-dealing. Thats OK though, get together with a few friends and your IRA buys options on their houses and you buy options on theirs etc. Don’t do ANYTHING without consutling a good tax attorney or IRA custodian first. The self-dealing problem and other issues are CRITICAL and MUST be handled correctly. Remember I am NOT an expert in this field and I am still learning myself.
Regards, doc
No Glenn, that is what everyone thinks but… - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on July 01, 2002 at 12:03:33:
…that is just the point I’m trying to make. It is NOT NECESSARY to live in the house for two years under the certain conditions specified in subsection C of IRS section 121. We need to read the language more carefully, looking for ‘workarounds’. That is where the real money is for the small guy. Everyone is missing the boat here. If you move for change of job reasons you can prorate your two year period. That means you can stay for as little time as is necessary to rehab a house and then move on, while still qualifying for a pro-rata exemption from federal income taxes on the transaction. If more people understood this some really GREAT tax free money could be made. This tip comes from Jack Miller’s newsletter.
…sees the light… - Posted by Glenn-TX
Posted by Glenn-TX on July 01, 2002 at 15:41:14:
aha! OK, I had to reread a couple of Tax accountant web pages but I think I’ve got it now. As long as you have extenuating circumstances (like a rehabber job location transfer?) then this would work…cool!
Where is the cutting edge? - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on July 01, 2002 at 14:07:46:
BTW Re: the newsletter referenced above.
If you’re not getting it, you probably are not getting it.
Everyone seems to want to be at the cutting edge. Its just that most folks don’t exactly know where that is.
Jack Miller IS the cutting edge. Be careful that you don’t cut your mind though, he is very sharp.
Re: No Glenn, that is what everyone thinks but… - Posted by brad
Posted by brad on July 01, 2002 at 12:20:25:
i have to ask because so far i have not been able to find it so i can read it and make up my own mind. how far does the move have to be to make it legit. i live in a pretty spread out area and could move 70 miles and still be 35 minuites from the city. with good triangulation and the luck of the draw finding worn out homes i could do this indefinately and keep my kids in the same private school. what if you own more than one, what about getting separated on paper, and getting back togather at the completion of the project…lol
VERY VERY COOL - Posted by Dr. Craig Whisler CA
Posted by Dr. Craig Whisler CA on July 01, 2002 at 18:43:44:
(~: