Home › Forums › Closed Forums › Buying and Selling RE › California’s capital gains tax on RE is outrageous
- This topic has 18 replies, 10 voices, and was last updated 2 years, 8 months ago by
Escoguy.
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March 21, 2022 at 5:47 PM #23167March 21, 2022 at 5:56 PM #824491
gzz
ParticipantAnother solution is to sell my property in 5% chunks over 20 years to stay in a lower tax bracket.
Could I sell to a REIT in return for REIT shares that I can sell at my pleasure?
March 21, 2022 at 6:01 PM #824492teaboy
ParticipantIs it possible to turn your primary into an investment property, rent it back to yourself, and then do a 1031 exchange?
just spitballing..
tb
oh wait, found this.. https://learn.roofstock.com/blog/1031-exchange-primary-residence
March 21, 2022 at 6:14 PM #824494ParticipantYeah I may do a 1031. I live in a tear down and own another bigger one next door that is a rental. The value is 98% in the land, which I am not capable of developing to its highest and best use, which is either 8 market rate townhouses or 30 apartments, with six of them affordable.
I could 1031 exchange to a fully developed duplex or triplex.
That solves part of my problem, I am tired of living in a little tear down on a golden lot. I would still be extremely over-invested in RE.
March 21, 2022 at 7:39 PM #824496sdrealtor
ParticipantGzz I think your account got hacked by flyer. Oh and you could joint venture if you want to highest and best that land beyond your means
March 21, 2022 at 8:33 PM #824497
CoronitaParticipantFirst world problems.
March 21, 2022 at 11:11 PM #824499
JPJonesParticipant[quote=gzz]Wow, I was at least thinking of selling. But the tax on 3m of capital gains would be a million! No way Uncle Sam, I think I will hold until I die now, and gzz jr can enjoy a stepped up basis and sell then.
I kind of naively assumed it would be like 15% federal and the state would just be a bit more.
It is 23.8% federal and 13.3% state![/quote]
Oh no! You’ll only get to keep 2 million! Are we supposed to feel sorry for you? That is not a bad problem to have.
March 22, 2022 at 1:58 AM #824501flyer
Participantgzz, we had never planned to sell our properties, since we’re very happy with the cash flow and other benefits, and always knew we’d be leaving it all to the kids, as you plan to do, but I can understand how you might want to sell, especially if you’re not happy in your primary.
Imo, whatever you have to do to make it work will be worth it. As has been mentioned, you have some options, and even with a cap gains hit–you’d still be way ahead–and you and your family would be able to enjoy your lives in a home you love. Believe me, loving the home you live in is definitely one of the best things in this life.
March 22, 2022 at 7:29 AM #824502ParticipantHe’ll be tending to his pet Western Fence lizards in gridlocked Nirvana counting his walls soon. Bookmark it
March 22, 2022 at 8:24 AM #824505XBoxBoy
ParticipantReal estate capital gains aren’t any different than other capital gains are they? If you had made 3m on bitcoin or stocks, you’d pay the same wouldn’t you? And if you’d made 3m as a salaried employee I’m pretty sure your rates would be even higher. So why is money earned off real estate being taxed at a comparable level outrageous?
March 22, 2022 at 9:56 AM #824510plm
ParticipantReal estate taxes are still outrageous if people prefer to die instead of paying the tax.
At least with stocks you sell a smaller amount each year to avoid the highest 23.8 rate. You could probably get the 0 or 15 rate when retired and 15 or 18.8 rate when working.
March 22, 2022 at 10:00 AM #824511ParticipantDeath is the opportunity of a lifetime
March 22, 2022 at 10:04 AM #824512CoronitaParticipant[quote=sdrealtor]Death is the opportunity of a lifetime[/quote]
Death is pretty much an equal opportunity. And that is probably one thing you don’t want to be on the affirmative action/early admission track.
March 22, 2022 at 10:12 AM #824513scaredyclassic
ParticipantThe smart death move is to buy into nonexistence before crippling medical/nursing bills. Timing is difficult. Might be better to buy in too early than wait too long.
I was ready to die this weekend. I was riding across Joshua tree when I proclaimed, I could die right now and be satisfied. But I didn’t die. Maybe tomorrow.
March 22, 2022 at 10:14 AM #824514Participant[quote=XBoxBoy]Real estate capital gains aren’t any different than other capital gains are they?[/quote]
I would argue that they are different when applied to your primary home.
Prop 13 & the v. small $250k/$500k cap gains exemption combine to make it much less favorable for folks to move home, even more so at today’s prices.
I see this as a bad thing both for the economy & generally, for a number of reasons.The UK has full cap gains exemption for primary homes.
tb
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