Posted by David Krulac on October 15, 2001 at 19:02:00:
the IRS MAKES you report the capital gains and makes you take the depreciation or if not then the depreciation is figures just the same as if you had taken it. Depreciation taken OR allowed to be taken, I beleive is the killer phrase.
To SELL or NOT to SELL - Posted by Bill
Posted by Bill on October 15, 2001 at 02:40:36:
I purchased one of my two family homes 3 years ago for 165k in an up and coming neighborhood in NY. My forecasting in this neighborhood has been right on the money because the house is now worth 370k! If I sell this house, I will make over 200k tax free because it is listed as my primary residence. Do you as an investor take your winnings in this situation or would you hold and continue to collect rents?
I make a positive cash flow of $1,000/month on this property which is a great income for a two family. I’m thinking that by selling, I could use the 200k to purchase multiple properties and duplicate that income without having to take out home equity loans to do it. In addition to duplicating the income, I’ll have lots of money left over to enjoy… What do you guys and gals think?
Re: To SELL or NOT to SELL - Posted by dewCO
Posted by dewCO on October 15, 2001 at 22:02:07:
F.Y.I.—Don’t know what you mean by “it’s LISTED as my primary residence”. If you were ever audited it needs to BE your primary residence for 2 out of the last 5 years. That’s what the tax law actually requires.
Re: To SELL or NOT to SELL - Posted by Craig (IL)
Posted by Craig (IL) on October 15, 2001 at 18:15:39:
I just recently heard that it is possible to put an entire property in a tax-deferred, self-directed retirement plan. To do this, there’s some cost , but maybe not a lot. You would pay no taxes until you retire. Email: admin@entrustadmin.com
Re: To SELL or NOT to SELL - Posted by GL
Posted by GL on October 15, 2001 at 14:17:06:
If your only reason to sell is to buy more property that is a poor reason. You will be taking one step back to take one step forward.
You could refinance or get a home equity line of credit to free up some cash. If you use the creative techniques mentioned on this site, you won’t need much cash. For example you wish to buy another apartment house from an investor. You ask him to take back a second mortgage.He refuses to take back a second mortgage because the property would be too highly leveraged. You could offer him a second on your property instead which has plenty of equity.
I know of one investor who put 4 mortgages on his home this way. People who would not take back a mortgage on property they were selling would take back one on his house, on the grounds that if he was in a jam he would give it up last. He asked the guy who took the 4th mortgage why he did it, knowing the house was mortgaged for far more than it was worth. Why didn’t he take a mortgage on the house he was selling. He said if anything happened he might have to take it back, and he was so sick of that property he didn’t want to take it back.
Re: To SELL or NOT to SELL - Posted by David Krulac
Posted by David Krulac on October 15, 2001 at 11:17:53:
IF you have a two family and lived in one half for 2 or the last 5 years, then only half of your gain would be tax free. The other half assuming no 1031 tax free exchange would be taxed at 20% capital gains rate. So there may be Federal tax owed of $20,000 and possible state and local depending on your local laws.
hth
David Krulac
Depends… - Posted by David Alexander
Posted by David Alexander on October 15, 2001 at 05:36:12:
on…
Where your at in this game?
What your philosophy is?
What your goals are?
Some questions to ponder. At any given time in any market there is a right time to sell everything…
Like we’ve been experiencing incredible growth the last few years… likely the equity increases will become slower. It might be a good idea to sell, since your probably at the top of the market. 1,000 x 12 is 12k.
12k divided by 200k is only 6%.
That means just considering from a cashflow standpoint, that’s all your getting from your return on your equity.
On the otherhand… at a time when your not as aggressive it might be worth it to just continue to hold.
So you take the 200k and go back to work, reinvesting, risking the capital…
Or sit back take the passive 6% return.
David Alexander
Re: To SELL or NOT to SELL - Posted by Bill
Posted by Bill on October 15, 2001 at 17:59:30:
It’s all figured out already. I pay ZERO taxes on the two family. I’m not claiming the second rental so the government has no right to capital gains. My accountant/attorney is doing all the figuring. I’m just trying to figure out if it would be wise to sell now.