I bought it as a short sale 3 years ago and I've been lucky so its increased in value about 25%, give or take 5% minus closing costs additionally.

I'm idiot though I was thinking my capital gains tax was on the entire purchase and not just my gain. Do capital gains start from the time I bought it? I'd assume yes, and not just the time it stopped being my primary right? So realistically if I rent it for 5 years at about 3% depreciation a year that will negate my 15% long term capital gains tax right? I mean roughly of course?

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Posted by TheOcean

#honeyfriedchicken

Member since Aug 2004

43291 posts

Posted on 7/1/16 at 11:38 am to baldona

Cap gains tax would just be on your amount realized (what you sell it for) minus basis (whatever you paid for it). Difference would be what you pay in cap gains tax. If it has increased in value by 25% and you're an OT baller you might want to take advantage of the Home Sale Tax Exclusion of $250,000--possibly $500,000 if you and your wife qualify under the rules. Then pop the $ you saved in not paying cap gains taxes into other rentals.

Another option is to rent out your current residence, buy another one, live there for two years, sell and use up your exclusion on the new home and then go live in the old residence for two years to get the exclusion for your current house.

eta: since you live in FL and depending on your net worth + possibly exposure to liabilities (rentals/what you do for a profession), you may want to read up on the FL homestead laws if you choose to buy another house. I'd also pop the rentals you have paid off into an LLC

This post was edited on 7/1/16 at 11:45 am

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