Shyster1040 <Shyster1040[at]nospamhotmail.com> wrote:

- quote -

But that's only the lowest rate, on (part of) the capital
gain.

Somebody with $0 ordinary income, plus $10,000,000 capital
gain, is only going to be in the 0% bracket for a bit of the
gain. (Otherwise it would pay to quit your job in the year
you sell all your Google stock and original-issue
Microsoft.)

Seth

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- quote -

And if you can do all that, thank an industrial engineer who
designed the worksheets and forms to get you through it one
step at a time.

Linda Dorfmont E.A., CFP, CSA
Fellow, Institute of Industrial Engineers.

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- quote -

No, that's not correct. Under Sec. 1(h) you get the benefit
of the lower of the regular tax or the tax figured based on
capital gains. The way the tax based on capital gains is
figured, it is essentially the sum of the regular tax on
your taxable income, less your net capital gain, plus 5% (0%
for 2007) of the amount of adjusted net capital gain that is
less than, or equal to, the (positive) difference between
the threshhold amount for the 25% marginal rate bracket
($31,850 for 2007) and your non-capital-gain income, plus
15% of remaining adjusted net capital gain, with some
additional little rate brackets for specific items like Sec.
1250 recapture income, collectibles, etc.

Thus, whether the lowest rate at which your capital gain is
taxed is 5%/0%, or 15%, depends on the amount of
non-capital-gain income you have, not on the total amount of
your income, or, in other words, the rate is determined
exclusive of your capital gains, not inclusive.

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"Benjamin Yazersky CPA" <john...[at]nowhere.com> wrote:
- quote -

The property currently qualifies for a 1031 exchange but not
all the gain can be deferred. Pushing $600K into $300K will
leave some exposure to boot (taxable), especially with
mortgage relief not bought off with additional cash. The new
property (which has already been identified) needs to close
within 180 days of the close of the old one being sold. Then
you must operate it as a rental for at least 2 tax years to
show rental intent. You "may" move into it later but you
must hold it for at least 5 years before being able to use
the homeowner's exemption $250/$500K when you sell. Please
contact a 1031 specialist at a qualified intermediary firm
for specific advice.

Linda Dorfmont E.A., CFP, CSA

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"Daniel" <danielulmark[at]gmail.com> wrote:

- quote -

First of all, when you sell rental property, there will
likely be depreciation recapture taxed as ordinary income.
So, its not likely to be all LTCG.

One thing you may want to look into is a like kind exchange.
But, I don't know if you plan to live in the newly acquired
property if it would qualify for a like kind exchange. You
need to consult an expert in that field.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

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"Daniel" <danielulm...[at]gmail.com> wrote:

- quote -

Yes there is a way, but it must be carefully structured. You
can do a 1031 like-kind exchange when you sell your
property. But you must use an intermediary to facilitate
this. If you take possession of the money, even for a
minute, you will have to pay capital gains. Once you close
on the sale, you have 45 days to identify one or more
replacement properties and 120 days to close on the sale of
at least one of them. Then you must rent it out for a
resonable length of time. Most professionals advise at least
a year of renting. Then you can move into it and make it
your personal residence. If you live there at least two
years, you can then sell it and exclude up to $250,000 in
capital gains ($500,000 if MFJ). But you will have to
recapture any depreciation you took or could have taken
while renting it out.

If you decide to just pay the tax, your tax bracket includes
the income from the LTCG.

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danielulmark[at]gmail.com (Daniel) posted:

- quote -

Not quite that simple. I presume your "triplex" was rented
out, during the time you owned it. That means depreciation,
so there will be more complications that a simple
subtraction of the cost basis (It's called "recapture.")

If the deal hasn't yet been completed, there is the option
to investigate a 1031 exchange -- for "like-kind" rental
property ... but that wouldn't fit your plans as described.

The maximum LT gain is 15% (though the recaptures will be
taxed at a higher rate).

I would recommend you consult a professional for a more
precise consideration of your options, before the closing.

Bill

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"Daniel" <danielulmark[at]gmail.com> wrote

- quote -

A Section 1031 "like-kind" exchage would need to be done for
the full sales price (closer to $600,000+) to defer the gain
on the sale.

There isn't any mechanisim to prorate the gains into a deferal.

NOTE: It may be possible to sell one unit (if it's been
condo'd) and defer that gain using a like-kind exchange for
the duplex half that will be rented. Talk to a 1031 expert
in your area to see if it's possible to do that.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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I'm going to sell my triplex and will net 600k after selling
expenses. The basis is 400k so I'm looking at a 200k long
term gain and will get 200k at closing. I have never resided
at this property.

I will buy a duplex for 300k to replace it. Is there any
way to defer the (15% x 200k) tax on gain? I may reside at
this new property.

I am presuming that the tax bracket that determines your LT
cap gains rate is derived inclusive of the gain itself not
before it. Correct?

Thanks,

Daniel

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