Posted by Greg on July 26, 2005 at 02:52:33:
Emma,
Your husband is correct. If you sell within the first
12 months then you penalized/taxed with short term
capital gains.
If you need the money though you should sell, but get
with your accountant/cpa and see what amount of your
“profits” will go away to the tax man.
Once you know the answer to this, you will know
whether it is best to sell or to hold for a few more
months.
The 60-90 question refers to what’s called a 1031 tax
deferred exchange.
What this means is that you can sell rental property
and then you are allowed 90 days to identify a
replacement property, or else you wind up paying the
capital gains.
Keep in mind that when you do a 1031 Tax Deferred
Exchange, you are not allowed to touch the money,
it goes into the hands of a third party mediator,
then it has to be used as a downpayment on another
property.
You may want to find an exhange mediator in your area
who can help you with this, if you decide to do it.
Also, if you have the property, the best thing you
can do right away is to make a decision and either
get the property leased or sold as quickly as
possible.
All hte best,
Greg Bell
www.LeaseOptionLoopholes.com