San Diego Housing Bubble News and Analysis

Sounds fishy. We would talked that one to death here if it was true. I'll keep an eye out.

Partially correct.
It applies to houses purchased after the end of this year:
http://online.wsj.com/article/SB12179858...

It applies to houses purchased after the end of this year:

Actually it applies to SALES after the end of this year. It applies to ALL homes, even those bought before 2009. However the clock for counting the number of days of non-qualified use starts Jan 1, 2009.

The taxable gain is Dnon/Dtot
where Dnon is the number of days of non-qualified use after Jan 1, 2009. Dtot is the total number of days used (assuming you lived in it as a primary residence in 2 out of 5 years).

Details outlined here under item #3.
http://tinyurl.com/58q586

I am sure people will be confused by this for the next several years. I bet that they eventually just "simplify" it in a way that results in higher taxes.

I posted a thread in July with zero comments, crowded out by the more important topics like moonwalkers.

http://piggington.com/the_hidden_tax_tra...

"The personal resident exclusion is still good on your personal home. However, you'll be paying taxes on the sale of your vacation home, or rental property converted to a home. The tax will be based on the amount of days the house was not a qualified personal residence divided by the total number of days you owned it. This ratio is multiplied by the amount of gain realized on the sale of the property."

http://www.marketwatch.com/news/story/hi...

I have a question about this new law.....

Is this only for rental property which you convert to personal home? or does this apply to a personal home which you lived in for 3 years and then converted to a rental property 1.5 years ago.

I have a house I lived in as personal residence for 3 years and have since moved to San Diego and have rented it out for the 20 months. I am debating selling prior to next October to avoid paying capital gains taxes.... As long as I sell before October 1, 2009 I will have lived in the home 2 out of the last 5 years, but now I am worried that if I sell it next July, that I will have to pay taxes on the 6 months (Jan 09 - July 09) that I did not live in it, even though still in the 2 out of 5 window based on the new law. What is everyones take on this?

Thanks

Anyone have any info on this ?

All help is appreciated

Thanks again

Yes, I guess you need to count the six months. But it also depends on your capital gain.
You get 90% deduction (4.5/5).
If you are married, you have 450K
If you are single, you should have 225K

pepsi is correct.

a) Count the number of days of non-personal use after Jan 1, 2009.

b) Divide the number from a. by the total number of days you owned the home.

That's the percentage of the gain that is taxable.

So, assuming you rent it out for 6 months in 2009, you will be taxed on 10% of the gain. Long-term capital gains tax is 15%. So, you will pay 1.5% of the gain. Not a big deal. Just make sure to sell before you exceed the 2 of 5 years primary residence test. Otherwise at that point it is 100% taxable.

Not sure what the state tax ramifications will be.

If the home was originally purchased as a primary residence, and 5 years later rented for out for15 years, then returned as a primary residence in 2010. When you are ready to sell (after 2 years) the Dnon time is only counted after Jan1, 2009? Is this correct?

When you are ready to sell (after 2 years) the Dnon time is only counted after Jan1, 2009? Is this correct?

Yes. That is my understanding.