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tmoody1@gmail.com wrote:
> I think I'm about to be in a pickle. I just moved into a new house.
> I still haven't sold my previous house. Well, I found out last night
> I'm being relocated. I was told my new company is going to buy my new
>
> house from me but I'll still have to other house to sell. No
> problem. The problem is taxes. What kind of trouble am I looking at
> as far as taxes go for selling two houses within weeks or months of
> each other?
>
> The new house should net me about 75,000 in profit because it was a
> foreclosure and I've put in 3 months of sweat equity and real cash
> fixing it up. I bought it for 240,000, put about 35,000 into it and it
>
> should be have a market value of about 350,000.
>
> The old house will only make me roughly 15,000 in profit and maybe
> less. I bought this house for 138,000, I owe 131,000 and it should
> sell for 160,000. After commisions, fees, and paying off the mortgage
> I'll have roughly 15,000.
>
> Should I try and rent this house out for two years and then sell it to
> avoid capital gains, are there any loopholes I can take advantage of
> because I'm being forced to relocate?
>
> Help me out here. I need to know what I'm facing so I can use that to
>
> help me negotiate a relocation deal.
If your employer is buying your new house, it looks like you are stuck
with short term capital gains (earned income). Any improvements (not
your own labor) can adjust your basis upward and save some taxes. If
you rent your old house for more than 1 year it can receive long term
capital gains treatment. Rental property does not receive the owner
occupied capital gains exclusion. The owner occupied capital gains
exclusion only applies if you live in a house 2 of the last 5 years as
owner.
See IRS publications 523, 527 and 544 at irs.gov
Talk to a real CPA.
Happy Moving!
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Re: Real estate tax question
