Holding Period for LT Cap Gains - Posted by Scott

Posted by Ron on August 29, 2005 at 19:23:33:

I read the IRS rules, it basicly says you own the property and the clock starts when you assume responsibility. ie. HOA dues, Close, Insurance…

Holding Period for LT Cap Gains - Posted by Scott

Posted by Scott on January 31, 2005 at 17:11:14:

I have a relatively simple question that has stumped a lot of people. If I buy land and hire a contractor to build a house on it as an second home, but intend to sell immeadiately like a spec home, when does the holding period begin for gains to qualify as long term capital gains? Is it more than a year from the purchase date of the land, or is it a year from the completion date of the house? I’d like to do this sequentially as investments, yet have them qualify at the 15% LT cap gain rate. If it’s from the date of land purchase, I could do one every 13 months or so. How long do I need to wait?

Re: Holding Period for LT Cap Gains - Posted by Natalie Smith

Posted by Natalie Smith on February 02, 2005 at 16:14:29:

I’m not a CPA or attorney. I would think that this would be treated similar to a rehab where you intend to resell the property. If this is true, capital gains would not apply at all. You would be taxed based on your ordinary income. Capital gains comes into play when you are holding rentals. Any CPAs care to comment?

Re: Holding Period for LT Cap Gains - Posted by chet

Posted by chet on January 31, 2005 at 18:40:53:

not a cpa, but my interp would be land gets LTCG after 12, same w/ house.

Just offset by construction time

Re: Holding Period for LT Cap Gains - Posted by Scott

Posted by Scott on February 01, 2005 at 10:40:19:

Not sure from your answer, and you seem no more sure than I, but you’re saying there are two separate time periods? One for the land and one for the house? I doubt it. Since the house is just an improvement to the underlying real estate (land), I say the clock starts running from the purchase date of the real estate. If you buy an exisiting house and make improvements - remodel, addition etc., then sell, you don’t separate the improvements from the original for purposes of determining the holding period. It’s fom the date you bought the house.