Selling Your Residence Tax Free without Section 121

Selling Your Residence Tax Free without Section 121

You know that you have up to $500,000 in capital-gain exclusions when you sell your personal residence—but what if your house has more value than that? This time, we’ll talk about how to sell even a pricey residence without having to take a heavy tax “hit.” The High-Ticket Dilemma As you know, under Section 121, if you’ve lived in a house for two out of the past five years, you can sell that property and exclude gains up to $500,000 as a married couple filing jointly, and up to $250,000 as a single. But anything over and above that gets taxed as long-term capital gains. This is the dilemma that faced some clients I had in California, who had a personal residence that would represent $1 million in gain. When they saw a potential of $500,000 more than what they could exclude under Section 121, they asked me, “Clint, how can we sell this property and not pay any tax?” It’s actually amazingly simple. I told them, “Move out of your house, arrange to rent a home in your new area, and then designate this home as a rental. List it on VRBO. Put it on Airbnb. Show the IRS

Sell Your Home to YOURSELF for Tax Free Income

Sell Your Home to YOURSELF for Tax Free Income

Home, Sweet Home…Tax Break! Let’s talk for a bit about taking your personal residence and converting it into a rental. “Hold on a minute,” you say. “What’s there to talk about?” On the surface, it’s simple, right?  You might be ready to move up in the world, so to speak, but you don’t really want to sell your house. You know it’s got a great location, it’s probably going to continue to appreciate in value, and you suspect that it could bring in a handsome rental income for you. So why not just move out, spruce the place up a little, and put out the advertisement? Nothing Wrong With That…On One Level. It’s easy, it’s straightforward, and you’ll get a certain benefit out of it. But if you want to profit even more from this exercise, there’s a better way. In this post, I’ll show you how to take your personal residence and SELL IT to your business…and THEN rent it. It’s a difference you’ll feel at tax time! Here’s How It Works. Let’s say I bought my house 15 years ago for a purchase price of $200,000. Fast-forward to today, and that same residence is worth $500,000. Now, if

Protecting Your Residence – 4 Strategies You Need to Know

Protecting Your Residence – 4 Strategies You Need to Know

One major “hole” in many real-estate investment plans is a provision for protecting your own personal residence. If you’re lucky enough to live in states with homestead exemptions, this is less of a concern — however, if you don’t, the amount and type of protection you need should be a priority in your investment planning. … Continue reading Protecting Your Residence – 4 Strategies You Need to Know