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CECILIA

Joined: 10 Jan 2006
Posts: 1
0.09 Dollars($)
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Posted: Tue Jan 10, 2006 10:21 am Post subject: taxes |
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| a person owns 3 properties and want to sell them how can she avoid paying all this taxes from the profit on the properties. |
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jameshogg

Joined: 20 Dec 2005
Posts: 1514 Location: nevada
210.98 Dollars($)
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Posted: Tue Jan 10, 2006 10:31 am Post subject: |
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Hi CECILIA,
Tax on the principal residence may be avoided by following the rules of Internal Revenue Code 121 where $250,000 as single and $500,000 for married couple tax free home sale profit is allowed.
James |
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Samantha
 Community Mentor

Joined: 16 Sep 2005
Posts: 1539 Location: MASSACHUSETTS
137.28 Dollars($)
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Posted: Tue Jan 10, 2006 10:45 am Post subject: |
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Hi CECILIA,
Welcome to MortgageFit Forums.
I don't think one can avoid a tax on the profit from the proceeds of a sale of properties which are solely for investment purposes. In that case the capital gains rule will apply.
If the property is a principal residence, then you can get a tax relief as mentioned by James. The period of living must be at least two years within five years ending on the date of the sale. So, this is way you can look for.
There's is no limit on the number of homes that can be sold and have tax free profits ut each sale must be at least two years apart.
I hope, this information will help you.
Feel free to ask if you have any more doubts.
God bless you.
For MortgageFit,
Samantha _________________ Know how to compare lenders with mortgage booklet |
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blowdown
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0.10 Dollars($)
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Posted: Tue Jan 10, 2006 10:50 am Post subject: |
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What is meant by this long term capital gains?
thanks |
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Samantha
 Community Mentor

Joined: 16 Sep 2005
Posts: 1539 Location: MASSACHUSETTS
137.28 Dollars($)
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Posted: Tue Jan 10, 2006 10:55 am Post subject: |
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Hi,
Capital gains can be taxed at 5, 15, 25 or 28 percent of rates and even may be on a combination of rates.
These different tax levels are called long term capital gains. They are applicable to assets owned for at least 366 days or more than a year.
It is usually much lower than what you pay on your regular income.
God bless you.
For MortgageFit,
Samantha _________________ Know how to compare lenders with mortgage booklet |
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ligroy

Joined: 03 May 2007
Posts: 10
5.50 Dollars($)
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Posted: Tue May 08, 2007 1:33 am Post subject: |
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Capital gains tax rates are determined by the type of investment asset and the holding period.
In additional to the federal capital gains tax rates, your capital gains will also be subject to state income taxes. Most states do not have separate capital gains tax rates. Instead, most state will tax your capital gains as ordinary income subject to the state income taxes rates. _________________ Free Guide to Mortgage Refinance |
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kenstampe
 Moderator
Joined: 22 Jan 2007
Posts: 146 Location: Dallas, TX
50.64 Dollars($)
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Posted: Tue May 08, 2007 6:25 am Post subject: |
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Cecilia,
Not only should they be concerned with capital gains taxes, if the properties were depreciated over the years they may also have to pay back that depreciation to the IRS. OUCH.
The way to avoid this is a 1031 property exchange. They can't take the cash out liquid, but they can roll the sale from 3 properties into the acquisition of a new income generating property. It is really important to talk with a CPA on this who understands the 1031 exchange forms and tax code specific to this area.
Only if you are selling a primary residence you have been living in for a certain amount of time can you sell it and avoid capital gains taxes up to the limits as explained by jameshogg above. |
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