First of all thank you. I appreciate you sharing your knowledge and being forthcoming. Ive watched many videos about taxes related to real estate sales. Im new to real estate investing but I've taken the initiative. Ive bought my own home, fixed up and took a heloc which i used to buy a an investment property. im preparing to sell in about a month. I want to be able to execute this correctly and reinvest the liquid into another propertie(s). Understanding of finances and taxes is important. I see you suggested an intermediary which im glad you mentioned. I had no idea. I will rewatch this video and check your channel.
On Friday I flipped my first home. Is there anything I can do to protect myself from next year taxes, moving forward? Thank you for your vidoes. I LOVE LOVE LOVE your delivery style of news and information.
Gather all your expenses as deductions and please do not miss the closing costs on the HUD or settlement statement, those are significant deductions that I see so many accountants miss (out of laziness). Thank you for all the support Emerald!
2 Questons: 1) We owned and lived in house #1 as PRIMARY for 8 years. Then leased it for 4 years. Moved back at the four year mark for 2 additional years as primary. ( I did claim depreciation during the rental period). If I sell it after I made it my primary for those last 2 years, will I owe capital gains? OR will it be washed off because I went back to live in it for 2 year as my primary? 2) owned house #2 as PRIMARY for 26 months, I can sell and avoid capital gains under the $250/$500 rule as you just described, correct? thank you so much!
Do you have a walk through on form 4797 and selling a primary residence rented for two years and then sold? Still qualifies for the exclusion but can't figure out how to report it so only get taxed on recapture
Thanks Brian, question, I inherited my family home, treated it has my 2nd home, did a lot of fixing up and now I'm ready to sell. How should I handle the taxes on this property along with my expenses?
Question: if I’m exempt capital gain do IRS send me some king a form to report to my CPA or there no form just report to my CPA when go file tax ? Please explain
Thank you so much for the info. can I ask if I need to pay capital gain tax when I sell a gifted car. I got this car for free from my parents basically I paid 0$ on the car a couple years ago. and now Im selling it for 7k. do I need to pay tax on 7k profits?
Pickle: I owned property A for 7 years as PRIMARY Property. On 8/1/16, I turned Property A into a rental. Now shy off 5 years as a rental, I want to sell it. Would I have to pay Capital Gains on it ? The current lease is not up until 7/31/20, the next day is the 5 year mark of it being a rental. Originally, I was thinking of keeping this property forever. Things have changed for me and it is best for me to sell it this Aug/September, 2020.
Thanks for the great video Brian. Question for you: I purchased a new construction property 15 years ago and rented it out from day 1 for the first 10 years, and moved in 5 years ago and reported it as my primary residence. So for the first 10 years, I'd been writing off the depreciation. Now I'm ready to sell the property. How will the IRS look at the gains from the sale? Can my wife and I get the full $500K in cap gain as a write-off? Do I have to pay taxes on the depreciation taken for the first 10 years (aka recapture). Thanks for the advice.
Hi Brian, I rented part of my primary home(basement) for almost 18 years. I sold my home last year. Am I eligible to take primary home exclusion. Also I have depreciation of $150 k. I have to recapture that right. How do I enter that in 4797. Pls advise Ashly
So are you taxed for the amount you sell the home for, or for the amount that is profit? For example, if I buy a home for 200k and flip for 250k, would I be taxed for the 250k or 50k? (Not calculating other costs)
I flipped a home last year and sold it, so I add it to my Schedule C/1099 misc. tap and then as what option after that "contraction of buildings" because there is no flipping option. Can you please explain. Thank you so much.
Can the current difficulty of purchasing a home in 2021-2022 due to continuously losing on my bids (due to Low inventory and losing to cash buyers and my offers not getting accepted) be considered an unforeseen event that prevented me to do 1031 exchange within 180 days,? Can this qualify as tax exclusion? I tried to purchase a home after I sold my home but lost on all my offers on over 10 houses. And also during 2021 market, 1031 exchange was not seen in a positive way by sellers because of so many cash buyers that they did not want to deal with any contingency sale.
please do a video on converting a primary house into rental and then selling it and the tax consequences with few examples. I am confused, osem website says when converting from primary to rental your basis now becomes the adjusted basis or the FMV, whichever is the lowest, is that true?
Hi Brian. Thank you. This video was helpful. I see the video is approximately 5yrs old. So I’m not sure if you will see this remark. But I’d like to run my scenario by you and ask your opinion on which side I would fall on. In 2007 I purchased a home as an investment property. From day 1 my parents were renting the home from me. In 2010 I moved into the home with them and it became my primary residence until 2015. In 2015 they stayed in the home and I moved out. Now (in 2021) I am moving back into the home for a year or two. At that time I plan to sell the home. So my dilemma is, when I go to list and sell this home, does it fall into the investment property or primary residence category?
If you can answer my question would be great. Thinking of selling my primary and only house, lived here 8 years. Owe 40k, can sell for 250k. Want to save money and reinvest if the market goes down soon, if not then want to invest into a home and get a small loan to cover amount of extra. How much would I be able to take home after closing fees and everything’s a rough estimate. Would I need to pay taxes on any ? I live in California
I have a couple of questions: First, when does the two years start and end? For example, I closed on the sale of my home on June 27th, 2018. Could I sell my home on June 27th 2020 and not pay capital gains, or would I have to wait longer like June 28th or July 1st? Also, during my two years of living here, I rented out a spare bedroom for 22 of the 24 months. I didn't claim depreciation, but I did have deductions in previous years from hoa dues, real-estate tax, utilities though. Does that impact anything? Love your videos! Thanks!
Hello, great video as always. Question about a recently purchased investment pre-construction condo. I'm not planning to sell it any time, will probably keep it for a few years. Now that it closed (after 3 yrs), and value went up. Should I get an appraiser to assess the new value of the home? Will that benefit me in any way in the future when I sell the condo (tax wise)? Thanks!
Hi Brian! if a husband buys a wife out of her share of a house after a divorce, and he did not sell the house, how does she treat the cash settlement that she receives? Meanwhile, the divorce was three years ago but the decree did not call for the buy out of the house until after the kids graduated high school. Does the wife count her cash intake as a sale of her interest in the house? And qualify for a $250,000 exclusion? Or is her cash buyout treated as something else?
Hi Susan, yes, that would qualify for primary residence exclusion so that should take care of her gain. If not, meaning her gains were greater than $250K, then the cost basis would be her share and the sales price would be the settlement amount designated to be the amount for the home. I hope that helps!
Can you use your cap gain from your primary residence (multi families) to paid off and investment property you also own that will become your primary residence??? Eg: I currently own two properties; my primary residence is a multi families which I’m trying to sell with a capital gain of $500k to pay off my investment property that I will be using as my new primary residence
Hi Brian, I have acquired a property that I do not use nor have used, have been taking care it and paying property taxes. Its mortgage free and I sold the property since with covid I was not going to check on it and frankly, my age I really have never had any use for it. I am selling it on installment Agreement couple could not secure a loan they did give a down payment and have been paying monthly installments can you help me
Hi, and thank you for this very informative video. Just a quick question, I lived in my home for 9 months then sold it, will the IRS be coming for me for taxes, since I didn't live in it for 2 years? Thanks.
Hi Brian, can you please help me with my question. I sold my primary residence that I've owned and lived in only for little over 2 years, I made less than 200k as I am a single person. Do I qualify for the 121 exclusion? Thank you.
Hi I’m getting divorced and our home is paid off , will I be taxed for the sale of the home or if he buy me out will I be paying taxes on that money I got for my part ? I been living in the home for 10 years Thanks
GREAT CHANNEL Brian !!!! Lot of valuable info here. I have a question that I hope you can help me answer: I have house that I;ve lived in for about 4 years as my Primary House in Arizona. The past 2 years I have moved to another state for work and rent 1 room in that house to students. This year I want to buy another house in the new State as my new Primary Resident and also keep the old house in Arizona as an investment property for long term. 1- HOW should I do this in the most efficient way so that I can qualify the new loan as my new loan for new Primary Resident Home ? 2 homes in 2 different States 2- And let say 10 years from now I want to sell the 1st house in Arizona. Do I still qualify for the 250k tax free exemption since I DID live in it for more than 4 years in the beginning ??/
My wife and I are looking to relocate. We will probably have about $300K in cash left over after the purchase of our new home. Will that $300K will subject to taxes?
Hi Shannon, that's going to be straight-forward. That's going to be reported on the Schedule C and unfortunately taxed at ordinary rates (not capital gains rates). You're going to have to pay taxes on profits (you can't 1031 exchange those properties). Just don't forget all the costs that went into those flips INCLUDING the costs on the closing statements (both purchase and sale side HUDS or settlement statements).
Hello Brian. I have a three questions. Three years ago we purchased the house and rent it for two years. For the last year we was fixing it. Will it be considered the investment property or the flip property because we did not rented the house this year? Second question : if we will purchase another house, fix it and keep for a whole year will it consider a long-term gain or it’s still will consider as a flip property? Third question is: if we will sell the house after one year and one day and our capital gain will not be more than 80,000(married feeling jointly). Do we supposed to pay taxes or not? I will be very appreciated for your response.
I bought a second home on a lake so I could use it on weekends and for family vacations.It was not my priimary residence. Also, I never rented it, or depreciated it. I wasn't "flipping it". I don't do that. I had it for about 13 years and sold it in 2019 when I retired. I have a 1099-S (substitute) from the sale I received at the closing. According to IRS publications and documents, I need to complete a Form 8949 and report my (long term) gain or loss on Schedule D.I checked box F on Form 8949 because I did not receive a 1099-B (only a 1099-S). Am I on the right track?
Hi Gary, yes, you are correct and your report it as long-term non-covered transaction (because it's not reported on a 1099-B). I hope that helps. Thank you for watching and for your support!
Hi Julie, you will be reporting your rental income and expenses on Schedule E of your individual tax return, your 1040. I hope that helps. Thank you for watching and for your support Julie!
Mother transferred ownership of house 3 years prior to her death to us 3 children. We sold it in 2019 soon after her death. She never gifted it or paid any tax or filed 709. How much tax due we owe and what form do we use? Mother bought for $89000 and we sold it for 140,.000 Thanx
Hi Eric, you don't use $89,000 as the cost basis between the 3 children. It would be the fair market value when the property was transferred in 2016. Or, if there was a price stated on the transfer, you would go with that. So the gain should be much smaller, probably minimal especially after considering you can deduct the closing costs NOT ONLY from the sale, but also from the purchase. Please take a look at my HUD closing statement videos where we go line by line of the items you can deduct.
Hi, let say i buy a property for 500k and spent 50k for renovation. Selling it after 3 months for 620k , on how much i need to pay tax ? what do i need to claim on to reduce the tax ?
What about selling an investment property and combining a 1031 exchange with a 121 exclusion and converting the replacement property to a primary residence as opposed to being another investment property?
In order to not be subject to the clawback provisions and invalidate the 1031 exchange, you must carry on rental property operations for 2 years and must be able to support that you rented it out for no less than 14 days at market-rate. Hope that helps!
Great video!! Can you please do an example of someone who buys a house lives their for 2 years and rents it for 2 years and goes to sell it. How does the cost basis and depreciation factor in for taxes after you sell?
Hi Naveed, when you convert the property from a primary residence to a rental property, the new cost-basis will be the lessor of the fair-market value or the purchase price. But please see my other video about this specific situation: th-cam.com/video/Kgps4SO4VLw/w-d-xo.html
ClearValue Tax Thank you for your videos! These are very clear explanations that you wouldn’t receive anywhere else! What happens if you don’t take depreciation expense for the years that you were renting the property? Is the sale still subject to depreciation recapture? I’ve heard that even if you don’t take depreciation expense every year, the amount of depreciation you were supposed to take every year gets accounted for at sale.
Your channel is invaluable; we have learned a lot from just watching a couple of your videos. We have owned a quadplex for 5 years and we have lived in one of the units for two years. We will sell the property very soon. Will we be able to claim $250k capital gain tax free per person although we have only lived in one of units?
I'm glad to hear and happy to help! The primary residence exclusion will only apply to your space/unit/property that you occupy as your primary residence, so just to that 1 unit. So the $250K per person on that unit that qualifies.
Thank you for creating such great content. One quick question, is mix used property (30% rental and 70% owner occupied) for the last 5 years qualify as primary residence to use the capital gain exclusive? Thank you!
We plan to sell three properties in the next year, our primary residence and two rentals, to start new construction on a primary residence. Would any or all of these be eligible for the 1031 exchange, or would the rentals not be considered a "like-kind" exchange since the proceeds would go to a primary residence, not another rental?
Hi Michele, first, a primary residence does not qualify for a 1031, however, if you lived there for 2 years as your primary residence, you wouldn't want to 1031 a primary residence in the first place. Second, you can roll the two investment properties into a primary residence in a 1031, it would need to be another investment property. I hope that helps!
Hi Brian, I sold a townhome which I lived in for 5years for under 250k. I rent it out for 4-5months prior to selling and did not report the income. When sold, based on the form they gave me to fill out, I would not get a 1099s. Should I still report it when filing tax?
Hi Donnie, as a CPA and you asking me publicly on the internet, of course I have to say that you need to report it. However, from what I've heard, some people don't and they usually don't get into trouble. But I can't condone that of course.
@@clearvaluetax9382 I had a question about a rent buyout. I lived in my apartment for 14 years and landlord bought me out. Do I owe taxes on it or, does it have to be a certain amount of money? I live in Cali and everytime I ask the property they ignore me thanks. Also it's been over 2 years
I have a question. My California domestic partner and I sold our primary residence of 10 years in 2019. We made a total profit $257,700.00. We split the money between us. Each of us file as single on Ca state and Fed tax. Will we have to pay any capital gains?
Hi Teaberrwmn, congrats on the property sale and no, you can each exclude up to $250,000 of GAINS. So you two will be good, no taxes. You still have to report it though and utilize the primary residence exclusion on the return. I hope that helps! Thanks for watching and for your support Teaberrywmn!
Hi, thanks for this video, I'd like to know- 1) I renovated the condo in 2018 improvement /spending 25000 and it's sold in 3-2019, sold only +32,000 after 11 years. can I claim the expenses (adding cost base) in 2019 tax return? 2) The improvement of 25000 can't reduce my depreciation recapture amount of 45,000, just the capital gain tax from the gain of 32,000 is this correct? Thanks!
You're only subject to depreciation recapture if you're at a gain. The improvement of $25,000 that you incurred adds to your cost basis. Also, you have to take into consideration all of your closing costs. You should take a look at my video about the deductible closing costs as well.
Me and my ex sold a house he live in it but not me he was the one who claimed every year on his taxes I never claimed it on my taxes so what happens now that we sold it on my side .
My client flipped 20 houses in 2019. He hasn't filed taxes in 4 years. I'm doing his books now. Any suggestions for me or him besides a loaded gun? His average profit was $30k on each. Please tell me your NOT saying 28% on $30k times 20?😭
Hi Shannon, what's your question? If you leave a reply, I won't be notified. If you leave a new comment, I'll receive the alert. Thanks for watching Shannon!
For more information, check out our helpful website: clearvaluefinance.com/
Thankyou so much sir for providing really really great information khamsamidah🙏🙏🙏🙏
Yes. I’m a Realtor for Investors and we did 4 1031 exchanges in December. Very detailed and time is of essence.
Brian thank god you got a new mic lol😅 this video makes me thankful
Hi Brian, your voice sounds much better with the new mic.
Brian,
Thanks for the great channel of education. I've learned a lot from this.
First of all thank you. I appreciate you sharing your knowledge and being forthcoming. Ive watched many videos about taxes related to real estate sales. Im new to real estate investing but I've taken the initiative. Ive bought my own home, fixed up and took a heloc which i used to buy a an investment property. im preparing to sell in about a month.
I want to be able to execute this correctly and reinvest the liquid into another propertie(s). Understanding of finances and taxes is important. I see you suggested an intermediary which im glad you mentioned. I had no idea. I will rewatch this video and check your channel.
Thank you for your videos.
You should do a podcast
Great information thank you
On Friday I flipped my first home. Is there anything I can do to protect myself from next year taxes, moving forward? Thank you for your vidoes. I LOVE LOVE LOVE your delivery style of news and information.
Gather all your expenses as deductions and please do not miss the closing costs on the HUD or settlement statement, those are significant deductions that I see so many accountants miss (out of laziness). Thank you for all the support Emerald!
This is very helpful. Thank you. Please do more! I just resubscribed
Awesome news about flipping it! Thank you!
2 Questons:
1) We owned and lived in house #1 as PRIMARY for 8 years. Then leased it for 4 years. Moved back at the four year mark for 2 additional years as primary.
( I did claim depreciation during the rental period).
If I sell it after I made it my primary for those last 2 years, will I owe capital gains?
OR will it be washed off because I went back to live in it for 2 year as my primary?
2) owned house #2 as PRIMARY for 26 months, I can sell and avoid capital gains under the $250/$500 rule as you just described, correct?
thank you so much!
Do you have a walk through on form 4797 and selling a primary residence rented for two years and then sold? Still qualifies for the exclusion but can't figure out how to report it so only get taxed on recapture
I was told 3031 exchange it’s only for investment properties? Can it be used for primary home? Thank you!
Thanks Brian, question, I inherited my family home, treated it has my 2nd home, did a lot of fixing up and now I'm ready to sell. How should I handle the taxes on this property along with my expenses?
Brian, can you recommend literature re selling a gifted home that was rented and never took any annual depreciation after 17yrs? Thank you
Watched 11/22/23
Thanks for this video.
What about a 2 or 3 unit property where you live and rent at the same time?
Question: if I’m exempt capital gain do IRS send me some king a form to report to my CPA or there no form just report to my CPA when go file tax ? Please explain
Any videos on opportunity zones and cost segregations??
Thank you so much for the info. can I ask if I need to pay capital gain tax when I sell a gifted car. I got this car for free from my parents basically I paid 0$ on the car a couple years ago. and now Im selling it for 7k. do I need to pay tax on 7k profits?
Pickle: I owned property A for 7 years as PRIMARY Property. On 8/1/16, I turned Property A into a rental. Now shy off 5 years as a rental, I want to sell it. Would I have to pay Capital Gains on it ? The current lease is not up until 7/31/20, the next day is the 5 year mark of it being a rental. Originally, I was thinking of keeping this property forever. Things have changed for me and it is best for me to sell it this Aug/September, 2020.
Thanks for the great video Brian. Question for you: I purchased a new construction property 15 years ago and rented it out from day 1 for the first 10 years, and moved in 5 years ago and reported it as my primary residence. So for the first 10 years, I'd been writing off the depreciation. Now I'm ready to sell the property. How will the IRS look at the gains from the sale? Can my wife and I get the full $500K in cap gain as a write-off? Do I have to pay taxes on the depreciation taken for the first 10 years (aka recapture). Thanks for the advice.
Hi Brian,
I rented part of my primary home(basement) for almost 18 years. I sold my home last year. Am I eligible to take primary home exclusion. Also I have depreciation of $150 k. I have to recapture that right. How do I enter that in 4797. Pls advise
Ashly
Thx 👍 😊 🙏
Hello, How may I calculate depreciation for 1120?
Lets say if i get a FHA loan on my house and am single and paid it off in 3 years could i sell my primary residence?
So are you taxed for the amount you sell the home for, or for the amount that is profit? For example, if I buy a home for 200k and flip for 250k, would I be taxed for the 250k or 50k? (Not calculating other costs)
This is my question too!
I flipped a home last year and sold it, so I add it to my Schedule C/1099 misc. tap and then as what option after that "contraction of buildings" because there is no flipping option. Can you please explain. Thank you so much.
Can the current difficulty of purchasing a home in 2021-2022 due to continuously losing on my bids (due to Low inventory and losing to cash buyers and my offers not getting accepted) be considered an unforeseen event that prevented me to do 1031 exchange within 180 days,? Can this qualify as tax exclusion? I tried to purchase a home after I sold my home but lost on all my offers on over 10 houses. And also during 2021 market, 1031 exchange was not seen in a positive way by sellers because of so many cash buyers that they did not want to deal with any contingency sale.
please do a video on converting a primary house into rental and then selling it and the tax consequences with few examples. I am confused, osem website says when converting from primary to rental your basis now becomes the adjusted basis or the FMV, whichever is the lowest, is that true?
Hi Brian. Thank you. This video was helpful. I see the video is approximately 5yrs old. So I’m not sure if you will see this remark. But I’d like to run my scenario by you and ask your opinion on which side I would fall on.
In 2007 I purchased a home as an investment property. From day 1 my parents were renting the home from me. In 2010 I moved into the home with them and it became my primary residence until 2015. In 2015 they stayed in the home and I moved out. Now (in 2021) I am moving back into the home for a year or two. At that time I plan to sell the home.
So my dilemma is, when I go to list and sell this home, does it fall into the investment property or primary residence category?
If you can answer my question would be great. Thinking of selling my primary and only house, lived here 8 years. Owe 40k, can sell for 250k. Want to save money and reinvest if the market goes down soon, if not then want to invest into a home and get a small loan to cover amount of extra. How much would I be able to take home after closing fees and everything’s a rough estimate. Would I need to pay taxes on any ? I live in California
Would your state also assess taxes on sale of your home? I live in NY and the gain would be 60k to 70k.
I have a couple of questions:
First, when does the two years start and end? For example, I closed on the sale of my home on June 27th, 2018. Could I sell my home on June 27th 2020 and not pay capital gains, or would I have to wait longer like June 28th or July 1st?
Also, during my two years of living here, I rented out a spare bedroom for 22 of the 24 months. I didn't claim depreciation, but I did have deductions in previous years from hoa dues, real-estate tax, utilities though. Does that impact anything?
Love your videos! Thanks!
How to record the sale of a business (LLC)?
Hello, great video as always. Question about a recently purchased investment pre-construction condo. I'm not planning to sell it any time, will probably keep it for a few years. Now that it closed (after 3 yrs), and value went up. Should I get an appraiser to assess the new value of the home? Will that benefit me in any way in the future when I sell the condo (tax wise)? Thanks!
Hi Brian! if a husband buys a wife out of her share of a house after a divorce, and he did not sell the house, how does she treat the cash settlement that she receives? Meanwhile, the divorce was three years ago but the decree did not call for the buy out of the house until after the kids graduated high school. Does the wife count her cash intake as a sale of her interest in the house? And qualify for a $250,000 exclusion? Or is her cash buyout treated as something else?
Hi Susan, yes, that would qualify for primary residence exclusion so that should take care of her gain. If not, meaning her gains were greater than $250K, then the cost basis would be her share and the sales price would be the settlement amount designated to be the amount for the home. I hope that helps!
Can you use your cap gain from your primary residence (multi families) to paid off and investment property you also own that will become your primary residence??? Eg: I currently own two properties; my primary residence is a multi families which I’m trying to sell with a capital gain of $500k to pay off my investment property that I will be using as my new primary residence
Proverbs 14:14
The backslider in heart shall be filled with his own ways: and a good man shall be satisfied from himself.
Thank you
Hi Brian, I have acquired a property that I do not use nor have used, have been taking care it and paying property taxes. Its mortgage free and I sold the property since with covid I was not going to check on it and frankly, my age I really have never had any use for it. I am selling it on installment Agreement couple could not secure a loan they did give a down payment and have been paying monthly installments can you help me
Hi, and thank you for this very informative video. Just a quick question, I lived in my home for 9 months then sold it, will the IRS be coming for me for taxes, since I didn't live in it for 2 years? Thanks.
Si, guey
Hi Brian, can you please help me with my question. I sold my primary residence that I've owned and lived in only for little over 2 years, I made less than 200k as I am a single person. Do I qualify for the 121 exclusion? Thank you.
Hi
I’m getting divorced and our home is paid off , will I be taxed for the sale of the home or if he buy me out will I be paying taxes on that money I got for my part ? I been living in the home for 10 years
Thanks
GREAT CHANNEL Brian !!!! Lot of valuable info here. I have a question that I hope you can help me answer:
I have house that I;ve lived in for about 4 years as my Primary House in Arizona. The past 2 years I have moved to another state for work and rent 1 room in that house to students. This year I want to buy another house in the new State as my new Primary Resident and also keep the old house in Arizona as an investment property for long term.
1- HOW should I do this in the most efficient way so that I can qualify the new loan as my new loan for new Primary Resident Home ? 2 homes in 2 different States
2- And let say 10 years from now I want to sell the 1st house in Arizona. Do I still qualify for the 250k tax free exemption since I DID live in it for more than 4 years in the beginning ??/
THanks Kevin!
My wife and I are looking to relocate. We will probably have about $300K in cash left over after the purchase of our new home. Will that $300K will subject to taxes?
Good info
Does he have videos on writing off cars for Uber?
I flipped 2 properties in 2019. I did not live in either place. What are my options when paying 2020 taxes? Thank you, Brian!
Hi Shannon, that's going to be straight-forward. That's going to be reported on the Schedule C and unfortunately taxed at ordinary rates (not capital gains rates). You're going to have to pay taxes on profits (you can't 1031 exchange those properties). Just don't forget all the costs that went into those flips INCLUDING the costs on the closing statements (both purchase and sale side HUDS or settlement statements).
Hello Brian. I have a three questions. Three years ago we purchased the house and rent it for two years. For the last year we was fixing it. Will it be considered the investment property or the flip property because we did not rented the house this year? Second question : if we will purchase another house, fix it and keep for a whole year will it consider a long-term gain or it’s still will consider as a flip property? Third question is: if we will sell the house after one year and one day and our capital gain will not be more than 80,000(married feeling jointly). Do we supposed to pay taxes or not? I will be very appreciated for your response.
No
I bought a second home on a lake so I could use it on weekends and for family vacations.It was not my priimary residence. Also, I never rented it, or depreciated it. I wasn't "flipping it". I don't do that. I had it for about 13 years and sold it in 2019 when I retired. I have a 1099-S (substitute) from the sale I received at the closing. According to IRS publications and documents, I need to complete a Form 8949 and report my (long term) gain or loss on Schedule D.I checked box F on Form 8949 because I did not receive a 1099-B (only a 1099-S). Am I on the right track?
Hi Gary, yes, you are correct and your report it as long-term non-covered transaction (because it's not reported on a 1099-B). I hope that helps. Thank you for watching and for your support!
Who issues a schedule E? I have a rental property but no schedule E.
Hi Julie, you will be reporting your rental income and expenses on Schedule E of your individual tax return, your 1040. I hope that helps. Thank you for watching and for your support Julie!
@@clearvaluetax9382
If I'm renting out part of my primary residence, do home improvements to the rented out section count as expenses?
Mother transferred ownership of house 3 years prior to her death to us 3 children. We sold it in 2019 soon after her death. She never gifted it or paid any tax or filed 709. How much tax due we owe and what form do we use? Mother bought for $89000 and we sold it for 140,.000 Thanx
Hi Eric, you don't use $89,000 as the cost basis between the 3 children. It would be the fair market value when the property was transferred in 2016. Or, if there was a price stated on the transfer, you would go with that. So the gain should be much smaller, probably minimal especially after considering you can deduct the closing costs NOT ONLY from the sale, but also from the purchase. Please take a look at my HUD closing statement videos where we go line by line of the items you can deduct.
ClearValue Tax
Hi Brian, how do you go about finding the fair market value of the property for a specific time period?
Hi, let say i buy a property for 500k and spent 50k for renovation. Selling it after 3 months for 620k , on how much i need to pay tax ? what do i need to claim on to reduce the tax ?
What about selling an investment property and combining a 1031 exchange with a 121 exclusion and converting the replacement property to a primary residence as opposed to being another investment property?
In order to not be subject to the clawback provisions and invalidate the 1031 exchange, you must carry on rental property operations for 2 years and must be able to support that you rented it out for no less than 14 days at market-rate. Hope that helps!
I apologize, I meant 14 days per month.
Great video!! Can you please do an example of someone who buys a house lives their for 2 years and rents it for 2 years and goes to sell it. How does the cost basis and depreciation factor in for taxes after you sell?
Hi Naveed, when you convert the property from a primary residence to a rental property, the new cost-basis will be the lessor of the fair-market value or the purchase price. But please see my other video about this specific situation: th-cam.com/video/Kgps4SO4VLw/w-d-xo.html
ClearValue Tax Thank you for your videos! These are very clear explanations that you wouldn’t receive anywhere else!
What happens if you don’t take depreciation expense for the years that you were renting the property?
Is the sale still subject to depreciation recapture? I’ve heard that even if you don’t take depreciation expense every year, the amount of depreciation you were supposed to take every year gets accounted for at sale.
Your channel is invaluable; we have learned a lot from just watching a couple of your videos. We have owned a quadplex for 5 years and we have lived in one of the units for two years. We will sell the property very soon. Will we be able to claim $250k capital gain tax free per person although we have only lived in one of units?
I'm glad to hear and happy to help! The primary residence exclusion will only apply to your space/unit/property that you occupy as your primary residence, so just to that 1 unit. So the $250K per person on that unit that qualifies.
Thank you for creating such great content. One quick question, is mix used property (30% rental and 70% owner occupied) for the last 5 years qualify as primary residence to use the capital gain exclusive? Thank you!
The depreciation of your rental part allowed or allowable is recaptured at a 25% capital gain rate
@@mayh2610 I see. Thank you very much!
You rock!!!!
Thanks Anthony B, you rock too!
We plan to sell three properties in the next year, our primary residence and two rentals, to start new construction on a primary residence. Would any or all of these be eligible for the 1031 exchange, or would the rentals not be considered a "like-kind" exchange since the proceeds would go to a primary residence, not another rental?
Hi Michele, first, a primary residence does not qualify for a 1031, however, if you lived there for 2 years as your primary residence, you wouldn't want to 1031 a primary residence in the first place. Second, you can roll the two investment properties into a primary residence in a 1031, it would need to be another investment property. I hope that helps!
Hi Brian,
I sold a townhome which I lived in for 5years for under 250k. I rent it out for 4-5months prior to selling and did not report the income. When sold, based on the form they gave me to fill out, I would not get a 1099s. Should I still report it when filing tax?
Hi Donnie, as a CPA and you asking me publicly on the internet, of course I have to say that you need to report it. However, from what I've heard, some people don't and they usually don't get into trouble. But I can't condone that of course.
@@clearvaluetax9382 I had a question about a rent buyout. I lived in my apartment for 14 years and landlord bought me out. Do I owe taxes on it or, does it have to be a certain amount of money? I live in Cali and everytime I ask the property they ignore me thanks. Also it's been over 2 years
@@clearvaluetax9382 Hello, Do Home BUYERs and property buyers Pay Tax on State and the IRS ????
If I sold my home in 1 year do I have to pay for the capital gain?
I have a question. My California domestic partner and I sold our primary residence of 10 years in 2019. We made a total profit $257,700.00. We split the money between us. Each of us file as single on Ca state and Fed tax. Will we have to pay any capital gains?
Hi Teaberrwmn, congrats on the property sale and no, you can each exclude up to $250,000 of GAINS. So you two will be good, no taxes. You still have to report it though and utilize the primary residence exclusion on the return. I hope that helps! Thanks for watching and for your support Teaberrywmn!
Hi, thanks for this video, I'd like to know-
1) I renovated the condo in 2018 improvement /spending 25000 and it's sold in 3-2019, sold only +32,000 after 11 years. can I claim the expenses (adding cost base) in 2019 tax return?
2) The improvement of 25000 can't reduce my depreciation recapture amount of 45,000, just the capital gain tax from the gain of 32,000 is this correct? Thanks!
You're only subject to depreciation recapture if you're at a gain. The improvement of $25,000 that you incurred adds to your cost basis. Also, you have to take into consideration all of your closing costs. You should take a look at my video about the deductible closing costs as well.
@@clearvaluetax9382 Thank you very much for your reply and knowledge, very much appreciated!
@@onlyonesky9611 My pleasure! Thank you Only One Sky.
If I buy a house for $220,000 and sell it for $235,000 do I need to pay $75,000 tax.? Moving out after the first year
I bought an investment house 10 years ago. If I sell do I have to pay taxes on the gain. I live in California.
Hi Jorge G Realty, you would have to pay taxes on the gain. Thanks for watching and for your support!
@@clearvaluetax9382 do you know approximate rate?
Hello. So I was a beneficiary on a house with two others. Sold the house in 2022. Who sends me the tax to file in 2023?
25% for recap. WOW!!
Me and my ex sold a house he live in it but not me he was the one who claimed every year on his taxes I never claimed it on my taxes so what happens now that we sold it on my side .
My client flipped 20 houses in 2019. He hasn't filed taxes in 4 years. I'm doing his books now. Any suggestions for me or him besides a loaded gun? His average profit was $30k on each. Please tell me your NOT saying 28% on $30k times 20?😭
Why not 28%?
What did we learn today guys? F this tax code and its complexity
Hi Brian,
I would love to pic your brain about my specific scenario here in TN.
Hi Shannon, what's your question? If you leave a reply, I won't be notified. If you leave a new comment, I'll receive the alert. Thanks for watching Shannon!
Now I'm nervous 😬 I can't tell my client this....holy smokes!
You have to. This is all really good info to have for all people concerned.
My lawyers name is Brian Kim in Honolulu for real. He is the best for traffic court.