Prevention Of Capital Gains?!?!?!?!?!
After only 2 months, I have compleated my first rehab and it should be back on the market shortly...The mortage is in my name soley as a primary residance, I am also currently looking to find the next rehab for investment as well as another for my residance...How do I effectively move the money to avert capital gains? I have heard as long as I roll it into another primary residance it will be ok....someone just told me that does not make any difference.... Help please :-S
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Are you selling or renting the home??
The rules as I understand it for primary residences....The first 250K (500k for a couple) in gains is exempt from capital gains. This should deal with most people. However you have to live in the house for 2 of the preceding 5 years. Partial exemptions for shorter time frames can be done if you meet certain guidlines (medical reasons or job moving that requires you to move more than a few miles). The last part I am a bit fuzzy on as it does not apply to me. It does not sound like you meet any of these requirements. I hope you kept good records on what was spent. The old roll over rule for buying and selling was gone 10+ years ago and was replaced by the above rules..
You will not be able to roll over as a general rule unless you are doing very few deals over a 5 year period.
Better would be to do one of the following.
Either sell on a 1031 exchange and then make sure you buy something before the time limit.
Alternatively, refinance and hold the property using a L/O.
BTW - This really is something you should take to a different forum.