capital gain tax

[John Burry]

The first question is what percentage of tax do I pay on a home that I flip within 1 yr?what percentage after the 1st year. I believe that the capital gain tax does not apply on a sale after 2 years at the primary residence? Also, If I do sell a property for a gain within the first year or 2 can I put the capital back into another property within a certain time frame without getting taxed, if so how long do I have? If you can move the capital into another property to avoid taxes can you move the capital into another investment like my personal business? I live in Indiana if that makes any difference. Any help is much appreciated. ThANKS!

[Chris Masons]

Hi guys,

To answer your questions: If you flip an investment non owner occupied property in less then 365 days you will pay short term capital gains which in a nut shell is taxed at whatever your ordinary income would be taxed at. In other words this income receives no special treatment. I think the range is around 10% to 39.6% depending on your income level.

If you flip an investment and have held it 365 days or longer you are subject to long term capital gains which again depending on your tax rate range from 0, 15 and or 20 I believe. 15% is what alot of people seem to fall under for long term cap gains. Soas you see you get a tax break for holding longer.

Regarding other questions, if you have occupied a property 2 out of the last 5 years you can sell and exclude any taxable gain of 250k or if married up to 500k in tax free gains.

Take a look at a 1031 exchange this will allow you to DEFER your taxable gaiin on a property. there are quite a bit of rules and regulations to follow to qualify for this exchange. Nto that it cannot be done but will require a 3rd party intermediary to assist witht he transaction.

I hope I have answered your questions.

regards,

Chris