Re: [CANSLIM] Homebuilders, more on taxation

From: "oaktoad" <oaktoad@mindspring.com>
Subject: Re: [CANSLIM] Homebuilders, more on taxation
Date: Fri, 7 Jun 2002 11:42:28 -0700

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From: Winston Little <wlittle1@peoplepc.com>


>>My understanding is that  the ROLLOVERS are gone!

This is true, no more rollovers



>>A house seller POCKETS TAX FREE any gains up to $500,000 for filing
jointly, half for single, if the home is principal residence for two years.
If occupied for less than 2 years, tax is due.

There are exceptions.. for example if you change jobs you can get a prorata
exemption.. for example if only there one year you get 50% tax free.

Also, the house just has to be your principal residence for the two years.
For example, let's say you have a vacation home and live there for three
months a year.. your prinicipal residence only has to have been owned for
two of the last five years...

>>This is a BIG DRIVER for selling a house and moving on, even bigger than
low interest rates.

I agree, esp in areas like No CAL where people near retirement age can sell
the house and move to a rural area.. then invest the extra money in stocks
for more income (yah, right???)

An important area so if you are thinking of doing something like this,
consult a CPA or Enrolled Agent for guidance .. could cost you some serious
money if you do it wrong...

One other thing that can be done if you have rental homes. You can sell your
principal residence and take the 250/500 tax free gain (balance is cap gain)
and move to your rental .. live there for two years and sell it and take
another 250/500 tax free .. there is some recapture for depreciation taken
since 1997, but should be peanuts compared to what you would have owed..

Frankly as a long term strategy for those interested in real estate, owning
some rentals that you would not mind living in is not a bad one at all ..



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