Capital Tax..

Anybody know ways to get around it?.. Besides making it my primary residence for 2 years. I'm currently renting it and thought about having my mail sent there and possibly putting the water in my name.

 

Not that I'm aware of. I've thought and thought and nothing that seems to be fool proof came to mind.

 

Repairs and improvements on the primary residence, and use those receipts. No one is going to inspect the rental to see if you put in a new bathroom, deck or whatever.

Of course that's cheating the Government...............

 

I have no idea what you're talking about

But I have heard that things such as repairs and such help out.

 

Spending $30,000 on my primary to cover the profit on investment seems kind of counter productive.

 

No profit from investment here

 

it has been a long time since I have done CPA work (yes I am a CPA but do not practice anymore) so check this out, but I believe what you are trying to do will actually backfire on you. Due to many reasons, but one is exactly what you are trying to do, the "tax free" results for your primary residence is now limited. As a result you may find that paying the capital gains tax (I think right now limited to 15%) is actually cheaper in the long run, then utilizing your home exemption. Do some Google searches or maybe pay a small fee to a current practicing CPA, and you may find you actually prefer the capital gain route.

 

From what I've read the average tax in my state is 28-30% but I'm going to talk with someone when I file my taxes.

 

that might be the correct rate for a short term capital gain. But I was assuming long term capital gain. The average long term capital gain rate is around 15%, but can get as high as 24%.

 

Section 1031 - use the gains from the sale of one investment property to purchase another 'like' property.

John

 

Now this could work since I'm buying a couple more rental properties.

 

section 1031 transactions need to be done thru an intermediary though. You aren't allowed access to the sales proceeds from the first sale. The proceeds go to the intermediary and then they transfer them to the sellers of additional replacement property that you buy.

TR

 

Sounds like you need to hire a decent tax accountant. Worth their fee many times over if you have complicated business transactions.