How To Avoid Capital Gains Tax When Selling Real Estate (2019) – 121 Exclusion Explained


– Hi guys, this is Toby
Mathis, from Anderson Business Advisors, and today we’re
gonna talk about nothing but selling your house,
and when I say your house, I mean something that you’ve
lived in, in the last two years as a personal residence or,
excuse me, last five years that you had two of the five years as your personal residence. So what we’re really looking
at, is something that you have lived in as your primary,
personal residence; not a vacation house,
or anything like that. Something that you actually
lived in as your primary residence, and, we’ll go
ahead and go over the tests because there are some
exceptions, but we’re just gonna start from the basis that
you need to have lived in it 24 of the previous 60
months before you sold it. And then we’ll go over what
all the exceptions are, et cetera, for that. So first thing to know: all
assets that you own, whether it’s a car, your house, anything
like that, is considered a capital asset, and when
you sell it, if it’s gone up in value, or if you
wrote it off completely and it’s gone up in value,
you’re gonna have some amount of taxable gain. So if you bought your
house, and we’ll talk about how to do the calculations,
but if you bought a house, and it’s gone up in value,
you’re gonna have some sort of capital gain. If you lose value, if you
used it for personal use, you don’t get to write it off. That’s whey if you buy a house
and it tanks, you sell it, you don’t get any benefit. If you buy a rental property and it tanks, you get to take the benefit. If you buy a house, convert
it to a rental property, then it tanks, you get to write it off. If you buy a house, live in
it as your private residence, and it tanks, and then you
convert it to a rental, then you sell it, not the same thing. There’s all little variations,
but I hope you guys get the gist: capital gains
is what we’re talking about when you sell an asset. For homes, there’s an
exclusion to the capital gains. It’s found in internal revenue code 121. That’s why they call it a 121
exclusion, and this is the part of the code that
says, if you’ve lived, and you meet a certain
test, if you own the home, and you lived in it as your
primary, personal residence for two of the preceding
five years, you have a capital gains exclusion
of, as a individual, up to $250,000, as a married
couple filing jointly, up to $500,000. So in English, I buy a house for $100,000, my spouse, and own it
for 10 years, lived in it always as my personal
residence, and I sell it for $600,000, I’m gonna
pay zero capital gains, because, when you look
at the lookback period, this five year period, did
you live in it two of the last five? Yes. Was it your primary
residence during that period? Yes. Great, then we have this excludement. Do we have any periods
of non-qualified use? In other words, did you rent
it out any period of time? No. Then we don’t have to worry about it. Great. 100% exclusion. That $500,000 of gain is excluded. You don’t have to report the gain. You pay zero capital gains tax. That’s why it’s so powerful. So first off, I’m gonna contrast this, this 121 exclusion, which
is for the house that you lived in– Keep in mind, primary
residence, two of the last five years. It’s not the last two years. It’s two of the last five. So in theory, I could have
lived in it for a number of years, and then
rented it for five years, and I would still get my 121 exclusion. It’s capital gains exclusion. If I rented it for three
years, there’s a good chance that I would have depreciation. That is not part of the equation. I do not get to avoid depreciation. For you guys that had home
offices, that where you did the home office deduction
as a sole proprietor, that’s also considered depreciation. You also get to recapture that. So there’s some little
points in here that, and that can make it
complicated, which is why it’s so important that you
listen to these types of videos, ’cause there’s lots
of little pieces to it. And you’re gonna see that the
exceptions and the variations can get maddening at times,
but what we’re lookin’ at is in, in the last five
years that I owned it, did I meet the use test? In fact, I actually used a step-by-step, so I say, step number
one will be like, hey, what do I get, like,
what will automatically disqualify me? Like what things would
make it to where I do not get to use 121? Number one, if you’re an expat. You don’t get to, in
fact, what do they say, you are subject to the expatriation tax. You’re done. You don’t get to take the 121 exclusion. How about, I 1031 exchanged
a property, and now I’ve lived in it, but
I have not lived in it for at least five years? Or let’s see, that you
acquired the property in exchange in the last five years. You’re done. You do not get to take this. If it’s longer than that, you
can actually still qualify. And then if you don’t meet the use and ownership test, then
you do not get to take the 121 exclusion. Now, to that last test,
the use and ownership, there are some exclusions for partial use, where there are some
periods of time where we can actually defer, which is
when you are active military, peace corps, things like
that, and you get deployed. And we’ll go over that. But, the first thing is
to look at this and say, first off, do I fall into
one of these exclusions? If I do not follow into
one of the exclusions, then I can start looking
and I’m gonna be able to work underneath the statute, the 121, and I might be able to exclude. Then we look at the limitations. It’s not 100% of the gain,
it’s not a percentage, it’s a dollar amount,
and so if you’re single, the dollar amount of capital
gains you can exclude is $250,000. If you are married filing
jointly, the exclusion is $500,000, but, both
spouses must meet the use and ownership test. This is where it gets funky. What if you get a divorce,
and you give the house under a decree, to your spouse? Guess what? You no longer meet the use
test, if you’re the one who got rid of it. The person who is selling
could actually use your use and ownership as part of their time. I mean your use, ’cause
they’re the owner now. So let’s say that I get
divorced from my spouse, spouse takes the property,
spouse sells the property. They can use, the group
of us, even just mine, if I’m the divorced spouse,
they can use my use, but since the ownership
is just in the spouse that cut the property, if it’s
in their name underneath the decree, and they transfer
that property into their name, they’re the only one
who can have ownership. So you, as the person who
divorced, it’s not your exclusion. It’s their exclusion,
but they can use both. They can use both to qualify. Now if it’s just them, what do we have? We have a $250,000 exclusion. If you guys are trying
to do it for yourselves, then when you divorce,
you better make sure you’re both listed on that property, and they’re gonna calculate
up, you still have to meet the use and ownership test. You’re both owners. Now you both have to meet that use test. So you’re gonna add you both
up, which can be a very– That could be a boon, or
it could be a horrific mistake if the lawyer doesn’t catch it, and you guys transfer title to somebody. There’s a few others, which we’ll go over. But we look at it and we
say, are you the owner? And what they look at
is if you owned the home for at least 24 months,
two years, out of the last five years, leading up
to the date of sale, you meet the ownership requirement. For a married couple,
if you’re still married, only one spouse has to meet
the test for ownership. You still both have to meet per use. And that’s the next step
is where we look at it and say, what is it used? It has to be your primary residence. So here’s where it gets fun. If you did, then, and
the 24 months can fall anywhere in that five
years, then it has to be your primary, personal residence. So some people have
two personal residence. It has to be the primary,
and they actually do some tests, and so they’re
always gonna look and say: where did you actually stay? Now there are some exceptions,
if you can’t take care of yourself and things like
that, but we’re not gonna get that into that. That’s for somebody who has
to, who needs assistance and actually has to be
removed from the home for reasons, which we’ll get
into, but, let’s just say for general purposes, you
must own it and have used it as a personal residence. You have to own it at the
time that you’re selling it. You have to have used it
as a personal residence in 24 of the, or two years
of the previous five. And we look back, and we
say are there any exceptions to that eligibility,
and that’s where we have some exceptions, and so let’s take a look. A separation or divorce during
the ownership of a home, and then we take a look, like,
that’s gonna be exception for the use, not the ownership. So again, if you no longer
own the house, and it sells, it’s not your exclusion,
it’s the spouse that owns it. If you both still own it,
you’re both still on title, then we can add it up
and you guys can actually both get your exclusion. Death of the spouse, and
then you have a period, you have a two-year window
of where you would sell it and they would treat it as
though you would be able to take advantage of both spouses as owners. Vacant land would be
carved out potentially, if it was used as part of your residence. So like, if you had a big
yard, and you sold part of the yard, then it may
be part of your exclusion. You might be able to get a portion of it. And finally there’s some
other exceptions, but we won’t get into those right now. I just wanted to touch
on each one of those. If you are spouses, and
you don’t make up and you don’t meet the 24 month
test, and you’re looking back at the use, what they
would do is they would say, we’re gonna treat you each
as single individuals, so the spouse that lived
in it previously that still owns it, and you’re
selling it, so you know, example, I lived in a
house, I get married, we sell it a year after we get
married, and they would say: oh, you’re not completely
toast, you’re not completely excluded, you would just treat
you each as single people and so my use and ownership,
I might meet it, so I might get a $250,000 exclusion,
even though we’re married, filing jointly. I don’t get the full 500,
but at least I get the 200, or the 250. And let’s say that it’s
jumped up in value, and I meet one of the exclusions to
that eligibility test. The exclusion, like we
had to move for work, or for health or go over what those are. Then even my spouse, even
though, let’s just say she did not live in it for
two of the last five years, she would fall under one
of the exceptions for a partial exclusion, then
you would get hers as well. So, there’s always little nuances. Like I said, this stuff can get maddening. If anybody ever says, “Oh,
it’s just straightforward “and easy.”, it is not. I assure you. So then we look at the limits. And so we look and say,
do you meet the use and ownership test? And then let’s take a look
and see, are there any periods of disqualified use? And here’s what I’m talkin’ about. Disqualified use kinda goes
like this: I’m a landlord. I own my rental property,
and then some smart lawyer says, hey make it your house. And if you sell it, you
have this big exclusion. Okay, I have a period of disqualified use. So let’s say that I had
it a rental for 10 years, and then I lived in it
for two, and I sold it. I would have a large portion
of the gain disqualified. The 10 compared to the two. That’s the proportionality
and they would say, hey you’re gonna get a
two 12th portion of the exclusion, because you
lived in it, when we add up all the days, and they actually
go by days, not by months. You go by days, and you
say, what portion of it was the residence, and what portion
of it was used for business? So, there’s a big portion
that could be disqualified, and we call that disqualified
use, that’s gonna give you a partial exclusion. The other portion is, like,
things that will automatically exclude you, is you’re
only allowed to take the 121 exclusion once every two years. So, I can’t have a house
that I lived in for two years as my primary residence, buy
another one, live in that two years, and then sell
them both in the same year and expect my exclusion. I get to take one
exclusion every two years. What I would have to do
is sell one of the houses, make sure that I’m still
qualifying for the other one, and then wait two years and sell another. There’s people that do that,
and they use the exclusion every two years. If you try to sell one within two years, it’s just an automatic denial. That’s just an automatic exclusion. The other exclusion, as we
talked about, was if you 1031 exchange within five years. Just done. You 1031 one of your rental
properties and then you moved in it for two years,
and then you sell it, you 1031’d within five years, done. You don’t get to use the 121 exclusion. You’re just done. And then the other way
is just to fail the use and ownership test, in which
case, there, we have some exceptions, what we call
partial exclusions that we could use. So just kinda step number
one, going all the way back to the beginning, is you
determine whether there’s things that automatically keep
you from qualifying, assuming that you’re not an
expat, that you didn’t just 1031 exchange it, that um,
you haven’t done an exchange within the last 24 months,
then we’re gonna take to step number two which is to
look at the use and ownership test, and we’re gonna go through that. We’re gonna determine
whether there’s a period of disqualified use, and
we’re gonna calculate all this fun stuff. Remember, this is only for capital gains. So, there might be some
depreciation that gets to be recaptured, and when you do the worksheet, when you actually look
at what the IRS requests when you actually do the
calculations, you’re gonna see that that gets excluded from gain. And I’ll go over how you
actually do the calculation here in a second. And that portion’s gonna be
subject to divided recapture. So again, going back to the
example of: I owned it as a rental for 10 years,
then I lived in it for two, then I sold it, there’s
10 years of depreciation. That’s not part of the gain. That actually comes off the
top, and that’s subject to depreciation recapture, which
would be at 25% right now. That would be subject to that taxation. I can exclude a portion of the gain. Like, I don’t just lose it. I would get two 12ths
under that example of the gain excluded. So there’s always these
kind of exceptions. The other area of exception
is if I was forced to move. So let’s say that I
owned it, and I sold it, but I didn’t meet the use test. Then there are a few exceptions
and this is when we look and say do I get a partial exclusion? And here’s the partial exclusions. So, this scenario is,
I lived in the house. I lived in it for a year
as my primary residence, and then I had to sell the
house because I was forced to move for work. And if you worked, then
it’s gonna be at least 50 miles farther than the old location. 50 miles farther from your home. So it’s not just 50 miles away. It’s 50 miles farther away
than your old location, and so, let’s say that
you had a house, and you commuted 15 miles to work. The new house needs to be
at least 65 miles away. Hope that makes sense. And then I can get a partial exclusion. So if I’d be entitled to a
$250,000 exclusion if I had lived in it for 24 months,
but I only lived in it for 12, then I would get a $125,000 exclusion. I would get half of the
exclusion, ’cause I lived in it half of the time. That’s the partial exclusion. A health related move will
work also, and that’s if you had to do it to
facilitate a diagnosis, to cure some health issue,
or if you had to care for family members, and the
family members can be a child, grandparents. They actually have a list:
brother, sister, mother-in-law, aunt, uncle, nephew, niece,
all these things could be included. And then they have some catch-alls. They say unforeseeable events,
and so unforeseeable events can be the death of a
spouse, could be a divorce or separation, those things
would might allow you. So if you buy a house and
then your spouse pops on you that they wanna get divorced,
and you sell it a year after you guys move in it,
you didn’t meet the 24 months, but you have ownership. You guys both on ownership,
but then the use wasn’t, you’d get a partial exclusion,
if that was the cause for the move. If you have twins, triplets,
quadruplets, quintuplets, you know, you just keep going. If you had more than
one child unexpectedly, then that’s gonna give
you grounds, also, for a partial exclusion. And then if you lost a job
or something like that, that could also give
you a partial exclusion. Other facts and circumstances,
they would look at, basically this is where
you throw the kitchen sink at ’em, saying hey we didn’t
anticipate something occurring, and this is the reason we
had to move, and you can try your best on that one
to get a partial exclusion. I’ve never seen too many
of those come along, but they do happen. Now here’s another little
thing: there’s a few points of clarity if you’ve been
using your house at all as a personal residence
after you’ve been renting it, or if you rented it after
you used it as a personal, after the personal use,
because they’re treated very differently. So first off, we’ll go to the
first thing we were talking about which is the disqualified use. If you’d used it as a rental
and you had a rental property then you moved into it,
the period of the rental is disqualified use, as we talked about. However, if you use it as
your personal residence, your primary, personal
residence for two years, and then rent it after
that, and then sell it, as long as that sale is within
three years, so that you still meet the two out of five,
that portion doesn’t count. We don’t count that. Put another way, if I’ve
lived in a house for 20 years, and then I decide I’m
going to rent it out, and I rent it out for less than
three years, the way the rule is written is they don’t
count that as disqualified use so long as the date that
you sell two of those last five years, you used it
as your primary residence. They don’t count that
portion as disqualified use. So, in one case, somebody
has it as a rental, they move into it, and they
use it for their personal residence for two years, then they sell. There’d be a period of
disqualified use that would mean that they’d lose a substantial
portion of the exclusion. So, let’s just use round numbers. I rented it for two years,
lived in it for two years, sold it, so I owned it for
four years total, I would get half of the exclusion
that I’m entitled to. So a married couple,
married filing jointly, they’d have a $250,000 exclusion. A single person would
have a $125,000 exclusion. You just cut the numbers in half. There’s another portion
of that, of course, which is the depreciation, if they depreciated that property. That’s not part of the
gain, that’s not part of the exclusion, that’s depreciation recaptured. It’s actually 25%, so
you’d end up having to do that calculation. If, let’s flip it around, I
lived in it for two years, then rented it for two years and sold it, and I only owned it for
four years, I get 100% of the exclusion, ’cause
we don’t count those years after I lived in it as
my primary residence, so the one, the reason that rule is there, is to prevent landlords
from just going in and moving in to their houses
for two years and selling, and every two years just
selling one of their properties that may have substantial appreciation. They just wanna– They don’t want anybody
to be gaming the system in that way. Now, where it’s fully
allowed, and the IRS actually has the calculation
written out on its website, it is when you have appreciation,
that’s far in excess of what you’re allowed to take. So for example, in the,
let’s say you’re in San Jose, or San Francisco area,
where you’ve had this big, huge run up and you buy
a house for $500,000, 10 years ago and now
it’s worth 2.5 million. So if you were to sell it,
you’d have two million dollars of gain, and you might be
able to exclude $500,000 of it if you’re married, filing jointly, if you’re following me. So, you meet the use and
ownership test, you get the full exclusion, but it’s not enough. It’s a half a million
dollars that’s just gonna put a, just a little dent. So you paid half a million,
you got two million dollars in gain, so you’re gonna get– You’re gonna get exclude $500,000 of that. You’re still gonna pay a big chunk of tax. If you want to avoid all the
gain, here’s how you do it, and they spell it out. You would take the house that you lived in as your personal residence,
and you’d convert it into a rental, and I would
suggest that you rent it for at least a year. There’s not a hard and fast rule on that. You just have to make it
into a rental property, an investment property. Once it’s an investment
property, it can qualify under 1031 exchange. So, you’re allowed to go
out and buy other investment properties with it. Now it doesn’t mean you can
go out and buy another house you’re gonna live in, but you could buy investment properties and
after a while make those into your personal residence. Again, you work with
a tax advisor on this, but you could exclude the
1.5 million dollars in gain. So, I could actually take
a house, I’ve lived in it for five, you know say,
lived in it for five years, it’s a highly appreciated,
half a million dollars of gain, we’re gonna get to write off
half of it, and I want to avoid the gain on the other half. I could convert that into a
rental property, rent it to somebody, and what am I
gonna do in the meantime? You could either go rent
a house, you can go and buy another house, because
you’re allowed to use the 121 exclusion every two
years, but you don’t have to live in it the day that you sell it. It doesn’t have to be your
primary, personal residence the day you sell it. You just have to have
met the use and ownership requirements of two out of
five years prior to sale. So then you would sell
that, say a year later, and you would be able
to 1031 exchange it into other properties. And then those other
properties, after you buy them, technically, you could
actually go and move into those at some point and make ’em
into your primary residence. You’d probably say let’s just
keep ’em as rental properties. Let’s go buy a bunch of
rental properties and go buy another house that you
could live in, or rent another house if you wanted to live
in it or just, you know, if you’re in this situation,
chances are you have the means to go out and buy another
home, and you wouldn’t have to worry about it. But, you can avoid the gain
entirely if you want to. So it is a possibility. Last thing is how you
actually calculate gain. And so as you’ve heard me
say, depreciation is not included in the capital gains exclusion. So the way the IRS has you
do the test, is they say what is your basis? You’ve gotta calculate up your basis, and I’ll go over that in a second. You take the gain, and you
subtract the basis off the gain and that gives you a number. I mean the total sale minus
the basis is gonna give you your gain, kinda the first level of gain. They say write down this
number, then you exclude from that gain any depreciation
recapture that comes from having done your house as
a home office, or having taken deprecation if it
was an investment property. So, if you have any of those
numbers, let’s say you had $500,000 of gain, but you
had $25,000 of depreciation recapture, you no longer
have $500,000 of gain for purposes of this section,
you have $475,000 of gain, and then you’d actually take
that $25,000 of depreciation recapture and recognize
it on your schedule D. So, there’s a portion of
it that would be excluded from tax, and then you’d
have a 25% tax on that depreciation recapture. The way you calculate
all these things, and the most important numbers are:
what are you selling it for? It doesn’t have to just be cash. It could be other properties
that you get in exchange or other services that you,
you figure out what’s the actual sale price? 99.9% of the time, it’s
just gonna be cash. It’s gonna be, you know, I’m
selling it for US currency and it’s easy to calculate. Make life, your world more
difficult is to try to add bitcoin. I don’t even know any
escrow companies that really wanna deal with that right
now, but whatever you do, whatever you exchange,
whatever the value is, is what your sale price
is, and then from that you remove the basis, and
basis is what you purchased the property for, plus we get
to add things into it, and like, that add into it is
your fees and closing costs. For example, abstract
fees, utility services that you had to pay, recording
fees, survey fees, transfer. You may have paid these when
you bought the property, but they get added in to your basis. You never got to write them off. Construction, you would add
in the cost of labor materials on any construction that you
did, even if you had to pay real estate taxes up through
the date of the sale date, if you were paying it for
something that you paid to the seller, for example:
hey, I’m gonna pay off some of the taxes, you
didn’t get to write that off, ’cause you didn’t own it. So you would just add it into your basis. Bank, or back interest,
even recording fees, if you agreed to pay some
of the closing costs, and even if you paid some
of the sales commissions, like, hey I really want
this house and they shifted them over to you. That gets added into your basis. Don’t forget to calculate that. Big things that are example
of improvements that we see some people miss, and I’m
gonna go through a whole bunch, just to make sure that
you’re filling your head in with what things get added
into basis, ’cause this comes right off the gain. This is something you immediately
write off, so it’s like, makes life easy if we have
zero net gain, and we don’t have to worry about anything, right? Additions are anything that
you added as a bedroom, bathroom, deck, garage, a porch, a patio. Any of that stuff gets
added into your basis. Your lawns and grounds, your
landscaping, if you added a driveway, walkways,
fences, retaining walls, swimming pool, any of that
gets added into your basis. Systems like your heating
systems, air conditioning, furnace, duct work, central
humidifier, air filtration, water filtration, wiring,
security system, even if you put in a sprinkler system for your lawns, all that stuff goes in. Plumbing is your septic
system, your water heater, soft water, if you live
in, like I do in Las Vegas, everybody has a soft water system. All that gets added into your basis. Interior, if you have built
in appliances, those got added into your basis. Kitchen modernization, if
you upgrade your, you know, the doors on all your
cabinets, that type of thing, flooring, wall-to-wall
carpeting, all that stuff comes in. Fireplaces, even if you put
in insulation into your attic or into your garage. Some people are doing that
now underneath the floors, pipes, all that stuff, if
you’re in, all that gets added. Big things that you might
do outside, satellite dish, and your siding, even
putting on a new roof. All that gets added in to your basis. And so when you’re calculating
out what gain you have, you gotta know what’s the
sale price minus what’s the sale price minus what the
basis is, and that’s gonna give you your primary number. If you did not, if you
never rented out your house, or if you never used a home
office, or even if you did, you did not take the deduction. In other words, you didn’t
do it on your schedule C during the period of time
when we had the dividend, they consider that a
dividend, which isn’t anymore, but if you did in the past
five years or so, you may have some dividend recapture,
and this does not include reimbursements that you took. Like if an employer
reimbursed you for the use of your house, that doesn’t
get reported anywhere. That’s not depreciation recapture. But if you did not have
any of that, or if you did rent your house out, but you did, you took zero depreciation
then you don’t have to worry about it. You just use the capital gains exclusion that you have under 121. I hope that this helps,
and I hope that you realize that anybody who says,
“Oh 121 exclusion, this is “what it is.”, it’s not. There are lots of little exceptions. We didn’t even, like there’s
some crazy ones that are out there, I don’t
wanna bend your head on, but if you’re a member of the
service and things like that, we can actually have periods
of deferment that are up to 15 years that we
can stretch the test on. Even if you’re deployed
for 10 years, we can still go back and capture this. So, the point of this is just to know that 121 is a boon if you’re
selling a house you don’t wanna pay capital gains. If you have too much
appreciation, you can actually couple this with your 1031
exchange, or actually do the 121 exclusion plus the 1031 exchange. Way it works is the 121
exclusion gets added into basis, so if you have the 2.5
million dollar house that you bought for $500,000, the new
basis and the new properties is a million. You get to use the 121
exclusion and the $500,000, hit a million. You get to, if you’re
rolling it into other investment properties, you exclude the 1.5 million dollars gain. It’s amazing, ‘mazing tool,
but there’s a lot of different nuances to this that makes
it something that you really should have somebody
run the numbers with, for you, doing it. But I hope that helps. Toby Mathis with Anderson
Business Advisors.

32 thoughts on “How To Avoid Capital Gains Tax When Selling Real Estate (2019) – 121 Exclusion Explained

  1. Hello.. I bought a house with a friend and he is living there as his primary address for 2 years now. We are also making rental income off of that house. I bought a second property where I am living for past year. Would I be paying capital gains on these properties if I were to sell? I didnt know about capital gains when I got into this market and I'm left horrified by this

  2. If you own your house in a trust, and buyer holds his funds in a trust account could you swap trust and avoid taxes all together? Granite all the paperwork is properly completed

  3. QUESTION: Do I need to use that profit money $250k gain to buy another Primary House within a certain amount of time to qualify for this 121 Eclusion? OR can I just pocket this $250k and do whatever with it??? Thank you

  4. So if I'm understanding this right, i bought my house for 179,900, it's now worth 260k and will go up about another 22k so lets say 280k when i sell, does that mean i have a capital gain of 100k so it would be tax free? Right?

  5. By far the best explanation with examples of the 121 Exclusion I found, and it took 6 videos to get here. Good job you now have another subscriber.

  6. What if I inherited my house. I lived in the house all my life. 30 plus years. My brother was on the deed… So he was the half owner as well. So after my dad passed my brother decided to file chapter 7 bankruptcy. That left me in a bad position and had no choice to sell it. Sold the house for 755k but i took my half which is 377k. Do i still get taxed? And if i do when do i get taxed?

  7. I’m married have owned a vacation rental since 1999 I plan on keeping my main residence,when I move into the vacation rental for the next 2 years before I sell,if I sell after 2 years of living in it,does that exclude me from having to pay capitol gains,and during that 2 year period I’m living in it,but away on vacations can that affect the 2 years

  8. Best 121 Exclusion explanation… Do you have video for 1031 combine with 121?

    Trying to figure out how to consolidate properties into one single property to purchase property in San Francisco.

  9. Hello. My husband and I both owned our own houses prior to our marriage. We then got married and bought a third house as our new home. Then my husband sold his old house in 2018 and I sold my old house in 2019. How can we file taxes for 2018 and 2019 so that we can get the capital gain exemption for both sold houses? Do we have to file married but separately in order to get both houses capital gain exemption? And also by qualifying the exemption? Do we still need to fill out form 8949 and schedule D?

  10. Hello, my wife and I bought a house in a foreign country after we retired on SS. This was 12 years ago. We've been visiting the kids back in the states on and off during all this time, spending months with them in their homes. We did not have and actually don't have a primary home in USA and we have used one of my daughter's home address as our own legal address in the USA.We never change our address to this foreign country and listed as our primary home, but this is what we consider our home, where we always go back and spent months in doing so each time, we have been doing it for all this years, for sure 24 out of 60 months. Do we qualify for 121 Exclusion?

  11. what if you owned a rental multifamily that you lived in one of the apartments? Can you still pick up the exclusion but still have to calculate the recapsure depreciation that had been picked up in the rental?

  12. So if i bought my house 24 months ago selling it for $59,000 more than what i paid, do i pay tax?. You said 2 of 5 years?

  13. I bought a house in December of 2015 and lived in it for the first 2 years. After which, I converted it to a rental. If I were to sell it at the end of 2019 (when the tenant’s lease ends) would I pay capital gains tax? At one point in your video you mentioned an example of living in a house the first 2 yrs then selling in year 4 and it confused me a little.

    In order to avoid the tax, would I have to wait until the end of 2020? I ask because I’d rather sell this year than next if I can help it.

  14. How would refinancing my mortgage then selling my mortgage to my business for rental investment purposes work? Is this possible as long as I have money to put in this type of business strategy? – Precious

  15. 7:33 something tells me you've seen this horrific outcome before ………….. sheesh. ……….. here's 250k

  16. I am wanting to Sell my house after living in it for less then 18 months and the vaule has went way up will I be paying some kind of tax because I would make at least 40k off of it after closing cost.

  17. Lets say you buy a home for 595k as a primary, we sell before two years, home will probably sell for $610k how much tax would i have to pay if we don’t qualify for any of the exclusions?

  18. Hi Toby

    I purchased a condo on May 2019, used it as primary residence and now Fall 2019 want to sell it. Is there a way to avoid Capital gain tax.
    Purchase 406,000
    Market Value 500,000
    Please let me know.
    Thank you

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