capital gains

16 Replies

Hi BP, 

This is my first post , kind of nervous !!!

So a small explanation before my question. I have a condominium in NY that I'm considering to sell later on this year, in order to rent a smaller place and pay off some much needed debt to reach my goal of buying my first investment next year. I've been living in the condo for a little over five years and it has appreciated little by little each year. My question is if i decide to sell it and make a profit on it will the profit be subject to any capital gains tax , and if so how much would the percentage be (estimation)? if anyone needs more information i'd be happy to share it to get a more concise answer. 

Lastly are there any reputable CPA referals that anyone could suggest in the NYC area with some strong knowledge in REI (for my future career)?

thanks for all your help in advance ,I'm  really excited to be a part of this community!

(pressing the post topic button now) 

Originally posted by @Malik Joseph :

Hi BP, 

This is my first post , kind of nervous !!!

So a small explanation before my question. I have a condominium in NY that I'm considering to sell later on this year, in order to rent a smaller place and pay off some much needed debt to reach my goal of buying my first investment next year. I've been living in the condo for a little over five years and it has appreciated little by little each year. My question is if i decide to sell it and make a profit on it will the profit be subject to any capital gains tax , and if so how much would the percentage be (estimation)? if anyone needs more information i'd be happy to share it to get a more concise answer. 

Lastly are there any reputable CPA referals that anyone could suggest in the NYC area with some strong knowledge in REI (for my future career)?

thanks for all your help in advance ,I'm  really excited to be a part of this community!

(pressing the post topic button now) 

 Hey Malik

Generally your primary residence would be exempt from capital gains taxes unless you had previously used it for a rental for a substantial amount of time. Long term cap gains (over 1 year) tax is 15% and short term (less than 1 year) is taxed at earned interest rate. 

Adam

Hi Malik

I think any CPA would be fine with real estate information, espcially when you are at the beginning of your real estate adventure/bussiness.

Keep up with BiggerPockets, don't spend any money on real estate seminars but go to some free ones, always remembering to not let them sell you any seminars.      Good luck on your real estate career

If you are looking for a less expensive housing situation why don't you house "Hack".   Buy a duplex or 4 plex and get Federal 3 1/2% Morgage and live in one of the apartments.  That  would be a wonderful start for you.

Hi Malik

I made an error.  I did not mean get a 3 1/2% Morgage I meant put 3 1/2% as a down payment on a Federal subsidized Morgage.  You can't do better then that.

Hi Barbara ,

Thanks for all your input, Ive been listening to a lot of the podcasts and I agree with them and you when I comes to spending money on seminars and gurus. I feel that I can get as much education here in the BP community and all the resources that are free on the Internet. I will go to as many meet ups and free seminars to learn enough and feel comfortable to eventually dive in. 

House hacking is a great idea and I'm very much open to it , multifamily properties in my area are substantially out of my price range but I'm not counting it out entirely. I feel like there will a glimpse of hope when the time comes. 

Hi Malik, If the home was your primary residence at least two of the past five years you are exempt from capital gains up to 250K (500K if married filing jointly) below is direct from the IRS website. 

How your sale qualifies. Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if the following is true:

  • You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
  • You did not acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
  • You did not claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.

Hi Malik

Why don't you work with a realtor and try to figure out what you can buy.  Figure in the amount of rent or maintance that you have to pay for rent in this market place  and then what the tenant (s) rent will bring in.  There's a good chance that you can buy a house and be on your way in Real Estate.  It sounds like you are going to sell your co op now so it could be the perfect time.

About your future plans.  Well You have the BP community and you can run anything you are interested in by the community.   If you tell them more about your income and more about what you will walk away with on your primary residence you will get a lot of help.  You will not be alone.  People will help walk you through step by step

Hi Richard,

Thanks I aprpeciate your help, that's perfect. So I'll be exempt from the capital gains tax which is great. Now I just have to do some  homework and decide weather it's a good time to sell it. 

Thanks again Richard

Hey Barbara 

That's sounds like a good idea, what I'll start another discussion and this time place it in the correct category and et some insight on what are some good options are for the future. 

Thanks for your help. 

Hi Malik:

Just a note of encouragement. You will be surprised what you can afford when the tenants are paying the expenses. That's what is great about Real Estate leverage.

Good luck to you.

thanks Barbara ,  I will definitely read that article 

hi Mark,

Thanks for the words of encouragement.

Hi , Mattew 

Thanks I apprxiate that 

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