Selling SF Home To Buy Miami Home

Member since 2023 · 1 post · 0 votes

Hi bigger pockets community,

I was wondering what advice you would give to my family. We have a family house worth around 2.9 million dollars in San Francisco. We are interested in moving to Miami by selling the San Francisco house and using that money to fund the Miami house. The SF house was technically a primary residence, so it might not be able to qualify for 1031 exchange. What do you guys advice on how we can save on taxes, how we can make our money work for us, and where we should look for a single family house? Thank you!

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Ray Hage

Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes

Hi Monica. I imagine your profit will be more than 500k on the sale. You will most likely want to roll the total 2.9m into RE in south FL into your primary residence in the Miami area plus whatever is left over into an investment property. That being said, if you have another useful purpose for the money (say starting a business or investing in stocks), you will have to pay taxes on the excess of 500k and make your money through a different investment.

I am an investor and realtor and hate paying taxes so I would roll into an investment property but the right answer depends on your age, lifestyle, plans for the money, etc. I'd be happy to have a conversation to help.

Regarding the tax issue, of course, you are going to want to consult with a local accountant in your area for all this.

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Adam Schooley
Real Estate Agent · Fort Lauderdale, FL · Member since 2015 · 175 posts · 79 votes
3y
@Monica Lee I'm here in South Florida and here you can exclude up to $500k for a married couple and $250k for single person for capital gains. That number is based off of what you're sale price - the price you paid for the house. I would look up the rules in California and speak to your accountant about it.
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
3y
@Monica Lee, Since it is your primary residence now you would qualify for the primary residence exemption where as a married couple the first $500K in profit is tax free. this is what @Adam Schooley is referring to - it's a national law.
But I'm guessing you have quite a bit more profit that $500K. and if you sell now you will have to pay tax on all of the rest of the profit.
If you can be flexible with your residence and time considerations there is a way to solve it all.
1. Move out of the SF house and rent it to someone for a year.
2. You can move to another of your houses or rent somewhere, or get a lease option on the property you really want.
3. After a year you sell the SF house. Now, because you have used it for investment for a year it qualifies for a 1031 exchange. But because you have also lived in it for two out of the last five years you also still get the primary residence exclusion of $500K tax free. $500K goes into your pocket tax free. And the rest goes into the 1031 exchange
4. The cherry on top of all of this is that you could use the 1031 exchange then to buy what will be your forever home. But you first treat it as investment for a year or so to satisfy the 1031 exchange. Then. you convert that one from investment to your primary.
That's a lot of potential tax savings. You just have to be a little flexible with your life situation.
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Luis Maqueira
Rental Property Investor · Miami · Member since 2022 · 247 posts · 75 votes
3y
Monica,
Many choices but if about what your lifestyle is and your future goals.
I love when people say Miami, do you know Miami city limits..... CoralGables, Maimi Beach is not Miami.
if you are in this chat I think you like to invest in Real Estate, talk to a 1031 exchange agent.
Buy an income-producing asset and rent a home a condo at the beach learn about Miami Dade County cities and lifestyle. Then you buy in the right neighborhood... Prices are not going up in the near future.
Good luck,
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Ray Hage
Investor · Fort Lauderdale, FL · Member since 2020 · 1k+ posts · 755 votes
3y
Hi Monica. I imagine your profit will be more than 500k on the sale. You will most likely want to roll the total 2.9m into RE in south FL into your primary residence in the Miami area plus whatever is left over into an investment property. That being said, if you have another useful purpose for the money (say starting a business or investing in stocks), you will have to pay taxes on the excess of 500k and make your money through a different investment.
I am an investor and realtor and hate paying taxes so I would roll into an investment property but the right answer depends on your age, lifestyle, plans for the money, etc. I'd be happy to have a conversation to help.
Regarding the tax issue, of course, you are going to want to consult with a local accountant in your area for all this.
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