Can I refinance a property to avoid paying capital gains? can I 1031 a rental to a primary?
99081
I don't think a rental-to-primary is considered 'like kind' property, which is a requirement for a 1031 exchange.
125171
Yes.\n\nYour modified adjusted gross income is just adjusted gross income with some things added back in. And Capital gains are part of adjusted gross income.\n\nKeep in mind that real estate has special rules and although - to you capital gains are one number, the rules for figuring it out have little to do with reality. \n\nIf it was a rental property then you have depreciation to consider also if you used part of your home as a home office deduction, if you lived there you get a certain amount before you have to start counting it, if you didn't own it for long enough you will get screwed. If you do a 1031 exchange you can put off the whole thing until later. If you die the taxes can be avoided all together for those that inherit it if done right.
273217
Most definitely.  And you don't need a trust as one of the other responders stated.  Borrowing the money is usually the biggest challenge, but I would imagine you've got that covered.\n\nAnd to be a little more specific from the previous answers, the IRS holds a withholding tax when you sell to make sure your capital gains taxes get paid without your skipping out.  \n\n\nGood luck!
976939
YOU MAY WANT TO READ THIS ANSWER -- THE OTHERS ARE WRONG !!!\n\nYes, your understanding is correct that when you convert a rental property into a principal residence there may be capital gains consequences.\nIf you have never lived in this property but are contemplating doing so, what you need to do in order to determine whether there is a gain is to obtain a current "fair market value" of the property. In your case, you will want as low a value as possible, so get it appraised or ask a real estate agent to give you a potential selling price given the area, market values, and condition of house (so get this done BEFORE you make any repairs).\nTo determine if there is a CG : take the current FMV and subtract from it the price you purchased the house for (example....if you bought it for 80K and it is valued at 96K when you move in...then your gain is 16K) but from this 'gain' you get to subtract any costs or outlays you incurred (these include legal bills to purchase the property + land transfer taxes + appraisals + capital improvements to the property that were never expensed such as new furnace or new roof or new appliances etc....) so to continue the example...if these totalled 12K, then your CG would now be 16K - 12K = 4K...so you would need to pay tax on HALF of this gain or 2K. The tax would be whatever your tax rate is for your income level x 2K (21%, 31%, as high as 46%).\nIf your CG is actually negative, then there is NO tax owing as there is NO capital gain.\nAlso, here's a small but significant point, if you have not been claiming the rental income on your tax returns these past years, then you certainly would be foolish to all of a sudden claim capital gains.\n\nIn a nutshell, you will want to have as LOW a fair market value as you can currently, have as many outlays accounted for as possible (many of these will be found on the Statement of Adjustments from the lawyer at time of purchase -- also any bills for improvements) as these go to lessen the 'actual' or deemed gain.\nAlso, if you initially did live in the house for a time and then converted to rental...then this may be of benefit as when you converted to rental (there is no CG as it was primary residence) the FMV at that time becomes your ACB - Adjusted Cost Base, which you use to calculate the CG instead of the purchase price.\n\nAlso, be careful reading the advice some are giving -- they really sounded unknowledgable.
183719
A pre-payment penalty really does not matter.  Nothing matters except for the fact that if there is enough equity in your home, then you can continue to refi.  Whether it is a smart idea financially, that should be the question.  This is not recommended, unless the cash you are recieving back from the refi is going into accounts which have interest rates that are going to give you a good enough return and heavily outweigh the interest in which you are paying to the bank.  Or, if you are going to invest the money into another peice of real estate.  Other than that, I would highly recommend against this practice.
728481
I'm no tax attorney, but you should be able to.  My mother-in-law owns rental property - she just did some work to it and plans on writing it all off this year.
441241
Okay here we go.\n\nA 1031 exchange is a method of selling one house and buying another without being subject to taxes typically imposed.  It appears your buyer is in such a situation.  When he sells his property the proceeds go directly to the Exchange Company.  When his purchase of your home is to close the Exchange company uses these funds for his down payment.  The closing statement will actually show the exchange company as the buyer.  This is not a concern for you.  \n\nGenerally this purchasing method is used when a buyer is a real estate investor and he is exchanging one rental property for a new rental property.  Again, this is an outside issue and should not impact the sale of the home or hinder the proceeds you receive.\n\nRead the contract thoroughly.  If necessary have it reviewed by an attorney.  Based on what you have said it does not appear your interest in the property will be comprised.\n\nIf you have any-other questions feel free to contact me and if I know the answer I'd be happy to help.
285863
On a schedule D. It has to be your personal home for the last 2 years to not pay capital gains. Make sure that you add in everything you have ever done to the home while you owned it into the homes basis.(repairs, maintenance) If you are going to buy another rental home then you will fill out 8842 like kind exchanges.
246913
Live in the home for 2 years. You can also sell the home and buy another rental property. Its called a like exchange. Those are the only two Ways that you can get out of paying capital gains. If you don't want to do that make sure you add everything you have ever done to the rental property in the last 8 years to the basis of the house. (landscaping,repairs,trips to check on the property and to sell etc.)
812345
I'm just going off the top of my head here without looking anything up, so just use my answer as a guide and not fact.  (Because staring at the code is factual, but sometimes doesn't get you very far in thought.)\n\nThe rental property.  Chop this up into three components - land, building and personal property.\n\nLand, as you know, is not depreciable.  But it should be listed as a separate component of the sale.  \nThe building is depreciable, but will also be under an additional code section, 1250.\n\nThe general rule starts with section 1231 property.  Then, depending on what it is, it might ALSO be 1245 property or 1250 property.  But just to keep things simple, think 1245 = equipment and 1250=buildings.\n\nBoth 1245 and 1250 pretty much say this: When you sell the asset, the amount over adjusted basis, up to the extent of depreciation taken, is ordinary gain.\n\nFor example.  I bought a piece of equipment a few years back for 10,000.  Tuesday, when I sold it, it had a tax adjusted basis of 1,000 (10,000 historical value less 9,000 of accumulated tax depreciation taken).  I collected 5,000.  In this case, ALL of my 4,000 gain (5,000 sales price less 1,000 adjusted basis) will be ordinary income.  \nLet's say I sold it for 12,000.  9,000 of my gain would be ordinary and 3,000 capital gains.  \nNow I'm babbling.  But in a nutshell, you are recapturing the depreciation expense at ordinary, just like you took the expense (over time).\n1250 for buildings has something similar, but not many have that issue anymore (unless they were purchased over a decade ago or so).  There is some special additional tax on the gain or special rate.\nBut the losses are ordinary, thankfully.\nAnd I feel like I'm getting off track here, but I'm trying.  :)\n\nBut onto the land.  It depends.  And perhaps this is where saying more info is needed might help.\nIf this is a separate piece of land accounted for seperately and Mary can prove that she wasn't going to improve anything, then there might be support for the claim that it is a capital asset and the gains are capital.\nHowever, that would be really agressive to me considering it saysing "holding for future development" and if there has been anything substantial done to the property.\nIn short, you will want to check out code section 1237 for reference too although it doesn't exactly fit your problem.\n\nAnd last but not least, I'll clog this answer with an Explanation nabbed from my own stuff.  Good luck on your research and forgive me for such a lengthy answer.  Usually I hate stuffed answers.  Cheers!\n\nReal property produces capital gain or loss on its sale or exchange if it's a capital asset. The main reasons for the exclusion of real property from the capital asset category are (1) that it's property held by the taxpayer primarily for sale to customers in the ordinary course of his business, and (2) that it's real property used in his business. Code Sec. 1221(a)(1) , Code Sec. 1221(a)(2) . However, the sale or exchange of real property used in a business (including rental realty), or the involuntary conversion of such property or real property that is a capital asset, can produce a Code Sec. 1231 gain or loss. \n\nThe fact that real property is held primarily for sale to customers in the ordinary course of a taxpayer's business precludes it from being either a capital asset or a Code Sec. 1231 asset (business-use property). Code Sec. 1221(a)(1) ; Code Sec. 1231(b)(1)(B) . The factual question of whether real property was so held gave rise to intensive litigation. Cases decided under Code Sec. 1231 are covered as part of the question of what property is used in a business. Decisions delineating property that is a capital asset are covered in this subdivision. The special rules of Code Sec. 1237 , allow taxpayers other than C corporations to obtain limited capital gain as to property subdivided for sale under certain circumstance
487244
You may need to talk to your lender who is carrying the note. They may refinance the loan into a no prepayment. Also if the loan has a soft prepayment you can sell the home.
980002
Of course.  It does depend on if the REIT company will accept and facilitate a 1031 exchange.  It must also be real estate that is exchanged and not a structure or a business that sits on the property.  If you want more info, please let me know.
512427
If it was your primary residence for a couple of years, you get the first 250k profit (500k if married) for free on capital gains.  With mortgages, you can only deduct interest payments, and rolling over your property to something of higher value only works for properties that you don't live in personally.
797301
if you have lived in the house for 2 of the last 5 years the tax on anything less than $250,000 profit is ZERO. ( $500,000 for a couple)\nif your gain is more than that or you do not qualify, then they charge about 5% on the gain (profit) for poor people and 10% or 15% for others.\nif you have not lived in the house two years, but maybe 6 mo or 1 year, you may qualify for the maximum exclusion rule if there is a good reason for selling and moving. ask tax man to explain it to you.\n maybe they will give you a percentage of the $250,000  exemption pro-rated, say $125,000 for 1 year etc.\n\n if the house is a rental, you can do a 1031 and use the money from it to buy another house. ( then have zero tax to pay now) then after the sale. you can get a loan on the new house to pull out your equity.( not the other way around) check with tax guy for advice. the tax is seferred until you sell without rebuying. or it is waived if you die and pass the house on. that is the best way.
671656
i don't think there is any legal way to avoid capital gains, but i am not sure
176996
A mortgage on real estate generally includes the lot, unless it's a condo or a townhouse.  This will be spelled out in the property deed.  What you are suggesting is actually refinancing the existing loan and adding the modular unit to it.  Talk to a mortgage loan officer at your bank or savings and loan.  It's possible that you can do this, since your mortgage balance is so small.  Your credit score will have a bearing on the bank's willingness to do this, but the equity you have in the house you are currently living in may be sufficient collateral to persuade them to do it.  You've gotta talk to the lending institution to determine the feasibility of what you want to do.
557999
Your mortgage broker is an idiot, you can't do this with the house you live in, but you certainly can with a residential property you buy as an investment.  You just go to a lawyer, and they will set up a deed (probably a quitclaim) to deed the property over to the LLC.  Then you (or the lawyer) have to file the deed at the courthouse.  \n\nAnyone who has a financial interest in the property (ie the bank) will have to agree to the change in writing, but just ask them, they may not care.  You can actually do this without telling the bank, but then they may find out on their own, and since the loan can be called with an owner change (this is technically an owner change) they will call the loan and put you in a bind, so check with the bank first but again they may not care.  \n\nThe bank could make you fill out a form or pay them more money or something.  In fact if you have a really good loan that they'd like to get off the books maybe they won't let you do it as an attempt to force you to refinance, but you'll just have to use your judgement on what to do here.\n\nNote, once the property is in the LLC you are still personally responsible for the mortgage.  So, if someone falls on your property and sues you, they can get the house (subject to the mortgage), but worst case you will still be liable for the mortgage.  Also if you put several properties in the LLC they can get all the other properties too, so you might want to set up a seperate LLC for every 3 properties or so (and make sure you have adequate insurance) but at least they can't take over your personal residence and assets if the properties are seperated into an LLC.  \n\nAlso be careful to very strictly seperate the LLC's business and your personal business.  If you have your own funds and the LLC's comingling the court may decide the LLC was an alter ego of yourself and not really a seperate entity.  Then there was no point in having a LLC, you are back on the hook for everything.\n\nFinally (didn't mean to write a book here, I just get going and can't stop - sorry) bear in mind that for future properties you will probably have to do the same kind of a deal ie put the property into a LLC's name, but your name will still be on the mortgage.  The bank will not lend you money based on the credit of a LLC with insufficent assets.  If the LLC has enough assets and money (and history) to buy it on its own, fine, but you are years away from there if you just started the LLC's.\n\nGood luck with it.