Vacation homes can be a source of great pleasure during their ownership; the reality of how they are treated for tax purposes happens once you decide to sell the property. You may have determined that the cottage at the beach or condo slope side at the mountain is your “investment” property, however, the truth is, […]
Tag Archives | Safe Harbor
There are two types of real estate that can be sold with advantageous tax treatment, your primary residence and your business/investment property. Favorable treatment exists for the sale of a personal residence if the property has been the primary residence of the taxpayer for two of the preceding five years. Section 121 of the Internal […]
The Internal Revenue Service recently released Revenue Procedure 2013-13 that provides a new safe harbor for home office deductions. This has the potential to make your calculations streamlined where it is difficult to determine a fair value deduction. Generally speaking, Section 280A disallows any deduction for personal expenses associated with the taxpayer’s residence unless a […]
It is possible to convert property from one type to another without tax consequences. Your primary residence can become your rental/investment property and your investment/rental property can become your primary residence.
Concerned second home owners are looking for ways to minimize tax exposure when selling their second/vacation homes. Many have owned these properties for years and are facing serious tax implications. It may be wise to convert second homes to investment property, then complete a 1031 exchange to defer all capital gains taxes.
It’s important to understand that there are three distinctively different types of real estate, some can be exchanged, some are prohibited from tax deferred exchange treatment. The three types are personal use, business/investment use and dealer property. Favorable treatment exists for the sale of a personal residence if the property has been the primary residence […]
While Section 1031 has been in the Internal Revenue Code since 1921, it has been enhanced and expanded numerous times since inception. The 1991 regulations provided several “safe harbors” to protect transactions from being disallowed. These “safe harbors” define the edge of safety and effect when an exchangor is entitled to the receipt of exchange […]