How do I avoid capital gains on a rental property that I wish to sell?

Asked by Rich, 33604 Wed Nov 27, 2013

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Heidi M.…, Agent, Honolulu, HI
Sun Dec 1, 2013
I agree with the majority of the comments. To defer capital gains on investment property one should consider doing an IRC Sect. 1031 exchange. There are rules and regulations one must follow. One should always consult a tax attorney or CPA that deals with this. You have to be aware of the deadlines and the other requirements before you receive any funds from the sale of the investment property.

To obtain general information about this topic one can always do a search on a search engine "IRC 1031 Exchange". The IRS website should also have some information too. Here's a link to an intermediary in Hawaii that has some general information about the process in different languages. See:
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Kristi Takus…, , Honolulu, HI
Thu Nov 28, 2013
Your best option is to speak to your accoutant or attorney. Depends on many factors. Normally a 1031exchange is done but ot seems you may want another outcome.
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Ruth and Per…, Agent, Los Gatos, CA
Thu Nov 28, 2013
On a rental property to avoid Capital gains you have to do a 1031 exchange or
Be carrying forward Losses from prior years.

Always best to talk to an accountant or a lawyer.

As it is a rental property one cannot shield the $250k if single or $500k if married.
That you can otherwise shelter one primary residence every two years.

Good luck

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Jerry Banger…, , Kailua, HI
Thu Nov 28, 2013
This question is not properly answered by real estate professionals. Please talk with your lawyer or accountant.
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Dante Velaci…, Agent, Honolulu, HI
Wed Nov 27, 2013
To avoid capital gains you could do a 1031 Exchange. However, it is not always desirable to do a 1031 exchange, If the gain is small it isn’t worthwhile to exchange because there are costs to exchange, and the basis of the Relinquished Property which is less than the purchase price is carried over thus
reducing depreciable basis in the Replacement Property – a gain of less than $25,000 -$50,000 is usually the threshold. I hope this helps. If you need more info let me know, I am also an accounting major.
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Marge Bennett, Agent, Fort Myers, FL
Wed Nov 27, 2013
Kimo has the right answer if you are reinvesting the money. otherwise, talk to your tax professional to explore your options.
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Kimo Smigiel…, Agent, Honolulu, HI
Wed Nov 27, 2013
You can defer the capital gains tax by doing a 1031 exchange. Or there is the $250,000 Exclusion on the Sale of a Main Home.

Individuals can exclude up to $250,000 in profit from the sale of a main home (or $500,000 for a married couple) as long as you have owned the home and lived in the home for a minimum of two years. Those two years do not need to be consecutive. In the 5 years prior to the sale of the house, you need to have lived in the house for at least 24 months in that 5-year period. In other words, the home must have been your principal residence.

As always it is highly recommended you consult your CPA regarding this.
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