How do I avoid having to pay capitol gains tax on investment property?
456285
The only way is to EXCHANGE them for other income property, called a SECTION 1031 TAX-DEFERRED EXCHANGE.  There are rules and time limits, and you cannot take out any cash without paying taxes on it.  If you cash out and just sell the properties, there is nothing to help offset or eliminate the capital gains tax at both the federal and state levels (if your state has income tax).  For more information, you can go look at the Federation of Exchange Accommodators website www.1031.org.
1008273
You can do a like-kind exchange, where you trade the property for another, and defer your gain until you sell the new property. The rules are complicated--you should talk to a CPA.
42691
You will get taxed on any gain that you make on the equity unless you put those gains directly into the purchase of a more expensive property.
671656
i don't think there is any legal way to avoid capital gains, but i am not sure
463475
Depends on whether this is an investment property or your primary home.\n\nPrimary homes allow for a gain of up to 250,000 if you are single, 500,000 if you are married.\n\nIf this is an investment, you will have to pay capital gains if you do not do a 1031 exchange.  There are formulas to calcualting your gain and applicable taxes.\n\nYou can also choose to do a 1031 exchange, and defer capital gains taxes into another investment property.\n\nHere's a link to the capital gains calculator on my site:\nhttp://www.nnnstore.com/1031_capital_gains_calculator.php
936701
The tax rate on long term capital gains other than listed securities or units is 20%. Thus , in your case , it will be 20% .\n          \nExplanation ot Section 112 of the I T Act makes it clear that ONLY securities or units have the benefit of option regarding indexation i.e 10% on LTCG without indexation or 20% with indexation.\n\nPlease read the Explanation to Section 112\n"Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities or unit or zero coupon bond, exceeds ten per cent of the amount of capital gains before giving effect to the provisions of the second proviso to section 48, then, such excess shall be ignored for the purpose of computing the tax payable by the assessee."\n       As far as saving on LTCG is concerned , you can take the benefit of Section 54EC by investing whole of LTCG in bonds issued by   either  by the National Bank for Agriculture and Rural Development  or\n\nNational Highways Authority of India Rural  or Electrification Corporation Limited,or\nNational Housing Bank,or\nSmall Industries Development Bank of India ,\n\nwithin SIX months from the date of transfer .\n\nYou can also take the benefit of Section 54F of the I TAct for saving tax on long term capital gain tax by investing the Sale Value of the long term capital asset in any residential house  within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house .\n\nRemember this benefit is not available to you in following cases\n i) You own more than one residential house, other than the new asset, on the date of transfer of the original asset; or\n\n(ii) You purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or\n\n(iii) You constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
1120438
Great point TaxGuru... great answer too.\n\nI'm referring to the fact that you might have depreciated the property and refinanced the property (taking cash out) over the years.  You might have only paid off your liens, but still received funds in excess of your adjusted basis.\n\nCalculating your real estate gain takes into account a number of factors.  Your original purchase price could have easily been much lower than your present liens.  Although you wouldn't have had to pay gains tax when taking cash out, you would have to account at the time of sale/title transfer.\n\nI've been working on my 1031 exchange real estate site, and should complete the site by July 4th.  Many of the functions are up and running.. you can calculate your capital gain here:\nhttp://www.1031store.com/resources/1031_capital_gains_calculator.php\n\nAlso, the site will have a place where you can search for professionals who will be able to help you... notably accountants(1031 exchanges are about deferring capital gains).\nhttp://www.1031store.com/experts/1031_exchange_experts.php\n\nI hope that you do not owe anything because this sounds like a tough situation.  Your foreclosure expenses probably ate up an awful lot of your potential gain.  You might want to also contact a real estate attorney to make sure that you are getting a fair shake.\n\nHope that this helps...
365949
If you sell it now, you will pay capital gains.  If you wait until it's in his estate and the estate sells it, you may not pay any estate tax at all, depending on the value of the estate as a whole -- currently, an estate tax exemption applies to estates with a value of up to $2 million; and in 2009 this increases to $3.5 million; and then in 2010 the estate tax is "repealed" altogether.  (See Smart Money link below.)  I say "repealed" in quotes because in 2011, the law sunsets and estate tax rates go back to what they were when the law changed (I believe that was 2001).  So if the estate is opened between now and 2010, you may not pay estate tax at all.  And of course, Congress could extend the law between now and 2011.  So, there is some uncertainty involved.\n\nThe above addresses federal taxes.  You'd also have to check to see if your state levies an estate tax, some states do.\n\nBut one thought -- with the uncertainty above, you might consider having your dad put the land in a trust.  This could be used to avoid estate taxes AND avoid the probate process.  The trust beneficiaries would receive the property at his death with a "step up in basis" -- meaning if they turned around and sold it after he died, their gain would be based on the land's value at the time of his death and NOT its value in 1920.  (See paytaxeslater.com link below.)  In fact, if your dad hasn't already done so, he might consider this approach for all or most of his assets.\n\nYou should run this by an experienced estate and trust atty where you live, with some planning now you might save some taxes.
812162
Yes you will have to pay. It is not your primary residence. However, you could defer the taxes through a 1031 exchange and purchase a similar property and not pay taxes right away. This probably won't help you because you want to pay down your mortgage though.
259251
I found this online - may be helpful - it's from 2 years ago but should still be generally applicable.  You should talk to a realtor.  \n\nHardship Can Reduce Capital Gains Tax Liability\nby M. Anthony Carr\n\n\nIf you sold your home last year you may owe capital gains taxes if you didn't meet certain criteria. The basics of exempting home sale capital gain from taxes is two fold: \n\n\nYou owned the house for at least two years, and \n\nYou lived in the home as your principal residence for two years out of the last five. \nIf a home seller doesn't meet this ownership and use criteria, then he or she may owe taxes. Frankly, the floor of the gain when taxes begin is so high that most homeowners will never owe capital gains taxes if they meet the two above exemptions. When you consider that the average home sale in 2003 was about $170,000 across the country, then that means most gain from houses sold in the U.S. will never be taxed. For single home sellers, the gain exclusion is $250,000 and for married tax payers, it's $500,000. \n\nHowever, you could owe taxes on less than that amount of gain if you don't meet the two-year exclusion test stated above. Thus, if you bought a house in 2002 and sold it in 2003, you may owe capital gains taxes. The issue of how much you could owe, depending on when you sold the property and for what price, is a book in and of itself. Especially when you consider that the capital gains tax rates changed last year with the new rates going into effect May 6, 2003 (any taxes on gains realized before that date are based on the older, higher rates). \n\nThis column is going to deal with the exemption rules above and how you may be able to bend them or waive them altogether. \n\nThe IRS is not heartless and for some homeowners who had to sell a house in less than two years, it may be possible to claim an exclusion but at a reduced amount, if certain criteria are met. This should answer the question from many of my readers who just can't believe that they might owe taxes on the sale of their home that they lived in for just a year. Well -- you might not owe those pesky taxes, if any of the following reasons are true. \n\nIf you did not meet the ownership and use tests, but the primary reason you sold the home was: \n\n\nA change in place of employment; \n\nHealth; or \n\nUnforeseen circumstances. \nYou may be able to avoid taxes, but you'll not get the full exclusion of $250,000/$500,000. The reduced exclusion is based on a calculation that you can find in IRS Publication 523, which takes into account how long you lived in the house and how long you owned the property to come up with a reduced exclusion amount. So instead of $250,000, it might allow you to exclude $100,000, for instance. \n\nFor those wanting a reduced exclusion because of change of employment, you'll need to at least substantiate that: \n\n\nThe change occurred during the period you owned and used the property as your main home, and \n\nThe new place of employment is at least 50 miles farther from your home than the former place of employment was. \nThe IRS will accept your call for a reduced exclusion for health reasons "if your primary reason for the sale is to obtain, provide, or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness, or injury of a qualified individual," according to Publication 523. Now a qualified individual doesn't have to be the head of household or spouse, it could also include any of the family members listed below: \n\n\nParent, grandparent, stepmother, stepfather; \n\nChild, grandchild, stepchild, adopted child; \n\nBrother, sister, stepbrother, stepsister, half brother, half sister; \n\nMother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, or daughter-in-law; \n\nUncle, aunt, nephew, or niece. \nHowever, the health card cannot be used if the sale of the house merely benefits a qualified individual's general health or we
1175233
I do not think that you have any other options... sorry to be the bearer of the news... but you might want to see if you can declare this as a primary residence... you are really reaching on this one.\n\nThere are essentially 2 types of applicable exchanges:\nA 1031 exchange and a Section 121 exchange.\n\nYou know from your question what a 1031 exchange is.  If you need more informaiton feel free to check out my site (I'm launching next week, so the site will grow soon to help you with your needs):\nhttp://www.1031store.com\n\nA section 121 exchange is for a primary residence and allows 250K after 2 years for single 500K for married.  Key term here is a primary residence.\n\nYour renting the place.  If you have claimed the income on your taxes or have depreciated the property, you are in the realm of a 1031 exchange...  the way it works... please don't hate me for it.\n\nI've estimated your gain to be as follows:\nhttp://www.1031store.com/resources/1031_capital_gains_calculator.php?check=form&original=180000&grossprice=240000&improve=&sellingexp=12000&depreciated=6000&staterate=5.04&payment=&payment=&payment=&payment=&payment=&payment=\n\nI'm releasing the site next week, but very relevant as a source.  I'm not the end-all-be-all... but...\n\nHope this helps...
582371
As lovely an idea that it, no it won't avoid any taxes. The only way to avoid the capital gains or ordinary income taxes on ivestments is for you to invest in a tertirement account like an IRA or Roth IRA or employee benfit plan.\n\nIt sounds like you own a business. Speak with your CPA to find out which plan is best for you. SOme examples are\n\nSEP\nSimple SEP\nSimple IRA\nSimple 401k\nRoth IRA\nTraditional IRA\n\nAS you can see, there are alot of choices. Each one has its benefits and srawbacks. Some are tax free and some are just tax deferred until retirement.\n\nIf these plans arent an option for you, look into index funds, they typically have low if not any turnover. \n\nTurnover=capital gains=taxes\n\nGood luck
945726
Yeah unless the money Is delt under the table. Youll have to pay a tax on it, the ammount really depends on how much youll be reiciving
872226
Visit the official DC property tax website, not some marketing site with (probably) inaccurate and generic information:\n\nhttp://otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594366,otrNav_gid,1679,otrNav,%7C33280%7C.asp
180903
A "grant deed" is the common form for this. There may tax implications by changing title. Consult a Real Estate Lawyer.
434134
See, there are lots of issues which determine the taxability of capital gains under I T Act1961 .You have not given complete detail.\n    Presuming , its a residential property, then first the compuation has to be done by taking the Indexation method . Find out the date of purchase of the residential property and cost as on that date. If it was purchased before 1984, then market value as on 1.4.1984 has to be taken as cost and then indexation has to be applied.\n    This way, capital gains has to be computed. If there is capital gain is there, you have following option\n   1. Purchase /construct a residential house within two years of the amount equal to long term capital gain.\n   2. If you do not want to purchase immediately, but plan to purchase within   3 years, deposit the amount of capital gain in SBI or other bank in Capital Gain Account scheme , before filing return of income.\n  3. Under 5EC of the I T Act, there are capital assets in which if capital gains are invested for at least  three years, then the capital gain is exempt from taxation.\n\nHope your
685210
There is no tax penalty. You just do not get the tax break for long term capital gains. You will pay taxes on your gain at the your regular tax rate. And don´t forget to includ all you costs in the propery, not just what you paid for it. Improvements are included in the costs.