I own an apartment building that I have owned for 5 years. I want convert into condos and sell units. Is there a way to pay only long term capital gains and not ordinary income?
Do the condo conversion, then continue to rent the condos to your tenants.
The fine line here is to avoid having your condo conversion and subsequent resale characterized as a real estate development activity. Holding the condos as rentals for some period of time before selling should accomplish this.
Consult a licensed tax professional for a definitive answer to your question.
I have been told that if I only sell 5 units this year and 5 next year I am not looked at as a developer and therefore only have to pay long term gains. It is held by an llc. Do you know anything about this?
Quote:
On 2005-09-29 13:24, saf52 wrote:
I own an apartment building that I have owned for 5 years. I want convert into condos and sell units. Is there a way to pay only long term capital gains and not ordinary income?
I was very curious how it might work, did a google search. There is an article that might give you some idea how to handle that:
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Do the condo conversion, then continue to rent the condos to your tenants.
The fine line here is to avoid having your condo conversion and subsequent resale characterized as a real estate development activity. Holding the condos as rentals for some period of time before selling should accomplish this.
Consult a licensed tax professional for a definitive answer to your question.
I have been told that if I only sell 5 units this year and 5 next year I am not looked at as a developer and therefore only have to pay long term gains. It is held by an llc. Do you know anything about this?
Quote:
On 2005-09-29 13:24, saf52 wrote:
I own an apartment building that I have owned for 5 years. I want convert into condos and sell units. Is there a way to pay only long term capital gains and not ordinary income?
I was very curious how it might work, did a google search. There is an article that might give you some idea how to handle that:
http://www.cushingdolan.com/pages/Condo_Conversions.pdf