Buying or Selling a Home/Buying, then selling...

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Expert: - 8/18/2009


Question
My husband and I live in a house I purchased when I was single 6 years ago.  This house will be paid off by the end of 2009.  We plan to buy another bigger, more expensive home in about 2 years and keep this one as a rental to then sell it when the real estate market recovers from the present bubble burst.  I was wondering what the capital gain implications were.  Is there a grace period of 2-3 years from the time we move out of the old house to pay the least gains possible for its sale?  In 2 years, I'll be 48 years old.  Are we best worth selling when I'm 55 if we pass this grace period?  What are the implications before 55 vs. after?

Answer
Hi Vilma,

Congratulations on getting the property paid off... no small endeavor these days...

Your question about selling the property is a little more complex...

1. your bought the home as your sole and separate property..but have you and your husband 'co-mingled' funds to pay off the property?

2. From your comments it appears you currently live at the property and plan to move to larger home, and rent this one out?

3. Grace periods...

Ok here we go...

Capital gain implications: if you  sell a piece of property that is your primary residence, and you lived in the property for 2 out of five years there will likely be no capital gain tax depending on the basis and sales price... talk to your tax advisor regarding the amount you qualify for, either $250,000 or $500,000 depending on how you and your husband handled #1 above.

grace period of 2-3 years from the time we move out? :  YES and NO... see your tax man, this will depend on how you claim the property...

Are we best worth selling when I'm 55 if we pass this grace period?  What are the implications before 55 vs. after?: Again there are many... the age difference is more important to your property tax basis if your country allows a prop 60/90 like we do here in Los Angeles California, it allows you take the lower tax rate one time only if you are over 55 in a qualifying county.

But again seek your financial advisor and tax CPA's advise... that is what they are there for..  the issues are complex and no one answer fits everyone's property interests.

I hope this was of help.
Good luck with everything.  

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Connie Wildasinn-Broker,GRI,RealtorŪ

Expertise

Broker,GRI,RealtorŪ, Investor since 1979. Buying or Selling Residential and Income/Investment Properties, How to understand the process, how to negotiate through the transaction, What to Look for - But more importantly 'What to lookout for!', How to tell if the time is right - or hold on and wait. Why not to listen to your friends and even your family members, Who really has your best interest at heart?. Understand why any market is a good market and how to spot a good investment for you! If you are looking in California.. check out my website www.MetroCalBrokers.com and if you need assistance in a neighborhood I don't service, I will locate a local agent to that area who actually knows their profession and can assist you in your needs!

Experience

4th generation Realtor in the real estate business, I have helped for over 2 decades clients buy and sell, I am the owner of a local brokerage in the Los Angeles /Long Beach area, and have been a top producing agent in the area since I became licensed. Working through a deal is different to every client, no two people or deals are exactly the same. Knowing how to bring professional advise to the table with clear and concise understanding of real estate world. I can help you handle your buying, selling and investing, managing a 1031 Exchange, working with Equity Sales, Probate, Pre-Foreclosure Regular and Short Sales there is little that I have not seen come across my desk over the decades!

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Managing Broker for MetroCal Brokers. We merged my old brokerage with MetroCal this year, and we look forward to expansion and growth moving forward. We currently employ 30 Realtors and growing. 15 years running top selling agent in Long Beach, South Bay area California. Top Producer 5 years straight Re/Max, C21, Realtyworld.

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