All Forum Posts by: Jackson Tate

Hey BP,

I'm currently in the process of selling my primary residence and purchasing a new home closer into town. 

As of now, I'm using the proceeds from selling my home to put down 10% on the new home.

Additionally, I have a flip that is scheduled to close next month (after the other two have closed).

I don't currently have enough to put down 20% on the home I'm buying but will receive approximately 100k from the sale of the flip.

I'm debating between using some of that 100k to pay down my new mortgage to 80% LTV or just eliminating my wife and I's 'bad debts' and having a clean slate.

I'm also wondering if I should use that 100k to turn around and invest in another project.

Any thoughts?

Cheers,

Jack

Kevin,

As long as it is your primary residence for 2 out of any 5 year period, you can sell it and pay no capital gains taxes on the gain up to $250,000 if you're single and $500,000 if you're married; however, the second you move out and make it a rental, you lose tax advantages of it being your primary residence and taxes will be assessed at the non-owner occupied ratio.

Caleb, I live just outside Charleston and would love to help you out. Feel free to reach out anytime.

@Mindy Jensen

The property isn't under contract yet as I haven't listed it for sale just yet. Still some things to finish up.

Unfortunately living in the property for the next 2 years isn't an option though I think I'd like to try that moving forward assuming we can get into a house and area we like. Prices in my market (like yours) of Charleston, SC have skyrocketed and there isn't anything I would deem reasonable within the city that we would want or could afford. It's mainly why we live outside the city to begin with.

@Account Closed

This is my first "flip" and I have done one whole sale and own one rental in addition to my primary residence. 

I paid 62k for the house, 52k in financed rehab costs, and then add in another what will end up being about 20k out of pocket. Original ARV was 205k but new comps within the last month are moving towards 215k.

@Account Closed

The flip was financed through a conventional with rehab included. The reason I still have it is because there was an unforeseen issue with installing a septic system that required purchasing a contiguous property which I just closed on last week.

@Mike Flora No, I have not tried renting it out to this point as it was unrentable. My goal was to sell it and use the proceeds to eliminate my remaining bad debt. You say you figure 20% tax....is that with being in the 25% tax bracket?

@Ashish Acharya Thanks for all the info and not making it complicated. It appears I need a new CPA.

@Steve Vaughan So you will pay 15% tax on the one you are selling tomorrow? 

@Linda Weygant

My current CPA has been harping on the whole 1 year mark because he says that this WOULD be considered capital gains.

When my parents have sold investment property in the past it has had capital gains implications as well.

So according to you, my current CPA is wrong?

I will be selling a flip in a few months and will be very close to the 1 year hold mark on the property.

Other than dumping more money into the property in order to increase the amount of write-offs, does anyone have any tips or strategies they have used to soften the tax hit on their flips?