Trying to reduce Capital Gains exposure!!!!!!!!!
I purchased a Townhome condo in a Beach resort in 2001. It was never rented. I have been living full time in this property for more than 2 years-my wife lives at our primary property- I am retired,she is not.
I want to sell this property and purchase Outright another house mortgage free.
My CAPITAL GAINS exposure I estimate at around $ 290,000. I am looking at an outright purchase of a property at $260,000. +
What can I deduct from my capital gains exposure to avoid as little as possible taxes ........ Settlements, HOA( Home Owners Assoication) dues, assessments from HOA,Home equity loan,re-financing, etc.
Any thoughts or advice would be deeply appreciated.
Thank-you in advance for your Help
Mike ( In North Carolina )
Unless I'm misreading your post, your tax exposure is ZERO. It's been your RESIDENCE for 24 of the last 60 months, you haven't taken the PRIMARY RESIDENCE exclusion in the previous TWO YEARS. Married filing jointly your sheltered gain is $500K, filing single it's $250K!
Consult your CPA before you sign any documents to ensure that you're doing everything to reduce your tax exposure.
Hope this helps.
So... you primarily live at one residence and your wife lives at another? Is it going to be difficult to prove to IRS that this condo you are trying to sell has actually been your primary residence? Because as all cash has said, you can get quite a lot of benefit from selling your own personal residence.
If you can't prove that this was your primary residence then I would suggest you read IRS Publication 523. It will explain to you how you can (legally) reduce your tax liability.
I would agree with allcash. If it's your primary residence for longer then 2 years you shouldn't have to claim I think up to 350k you can make tax free.....consult a cpa!
Your tax-free exclusion is up to $250K per person, so you absolutely qualify for a $250K exclusion if you live in this property as your primary residence. Proving it should not be difficult if this is truly your primary residence. You will have utility bills, services, mail delivery, etc., to show that you live there. Your neighbors can vouch for you, etc.
Plus, a local driver's license, old mail, etc. Keep a few of those around in case you ever get audited. You should have no cap gains exposure. Enjoy the money and happy retirement!