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Craig D Peltier
07-15-2009, 1:15 PM
Anyone know the law on this? Is it still as long as you lived in it 2 out of 5 years you dont have to claim as an investement property?
I heard that its pro-rated now but that may be if its a investement rental property.
What would the tax rate be? About 20% above and beyond what you paid , minus selling fee i.e agent fees and cleanup?

Thanks

Tony De Masi
07-15-2009, 1:50 PM
Bill, as I understand the law it is stil the 2 out of 5 rule. However, I have absolutely no confidence that that will remain in effect. Therefore, I plan on selling my rental next spring, one year ahead of what I had planned to do.

Tony

Chris Damm
07-16-2009, 8:21 AM
The tax laws change so fast that I can't keep up with them. Call a good real estate lawyer or CPA. I do know that you have to use the depreciated value (not what you paid for it) of the property as a starting point in your calculations.

Craig D Peltier
07-16-2009, 10:17 AM
MY CPA says that they last (IRS) updated it in January but she read it 5 times and it didint seem to make sense. She thinks there re-writing it now.

Thanks

Jeff Wright
07-16-2009, 10:52 AM
Ask SUCCESSFUL investment real estate brokers (preferably those who invest in real estate themselves) for a recommendation for an accountant knowledgeable in real estate tax law. They should be willing to answer your question for a reasonable fee, less than an hour's charge. I've often had both lawyers and accountants give an opinion without charge (no doubt in an attempt to earn future advisory business).

Here is one source (of many on the net) that may help:

https://www.1031cpas.com/advancedTopics/residenceTopics_housingAssistance.htm

I have used the 1031 Exchange technique a number of times, but not within the last ten years. The first time I did an exchange it cost nearly $2,000 (in addition to normal closing costs). Most recently it cost $500. Costs have come down considerably over the last five years.

Caveat: I am not an accountant and am an expert in nothing. Just my opinion. Seek competent advice; it's money well spent to minimize heartache.

Eric Larsen
07-16-2009, 8:29 PM
+1 for a good Real Estate broker. A good one will send you to the right person if he or she is NOT the right person.

Beware of anyone who seems to be rabid about securing your listing. Be up front that you just want information at this time.