Avoid Capital Gains on Rental Property Sale!

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In this video, I talk about how to avoid capital gains tax and depreciation recapture tax on rental properties that you sell. There are two components to taxable gain when you’re talking about selling a business property. Some common ways to avoid capital gains is either by 1031 exchange, hold till death, or taking the section 121 exclusion as a primary residence.
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Опубликовано:

8 сен 2024

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Комментарии : 54

@NguyenCPAs 3 года назад

How many rentals you got?

@jimross2101 3 года назад

9 single-family, 1 duplex.

@vincentortega4284 5 месяцев назад

1 single family, and plan the equity to purchase a duplex,or triplex

@mindyfeldman1091 3 месяца назад

Great explanation in words I can totally understand, thank you!!!

@ViralRivers 3 года назад

I am no cpa, but I do believe to get the full 250k/500k tax exclusion, it must have originally been a primary residence. If it was originally a rental, you get a prorated tax exclusion amount based on percentage of years as primary vs total ownership time

@binhvong5297 3 года назад

The proration is when the property goes from primary to rental back to primary. Ryan's example is rental directly to primary, i.e. moving into a 1031 exchange after 2yrs, that case you will get the full exclusion. The IRS clarified this in one of their publications. Cheers.

@steveb5736 2 года назад

@@binhvong5297 Thank you for your effort, but please state which IRS publication states ability to get full exclusion. I got same impression as Keith above that proration is norm for exclusion of Cap gains. Thank you again.

@seattledan 4 месяца назад

I experienced the same thing where Turbo Tax didn’t depreciate my rental as well!

@veronical.sagastume2466 2 года назад

Great advice, very thorough. Thank you for the detailed video

@emmanuelgutierrez8616 2 года назад

Not sure if I missed it, but everything you mentioned is for when you purchase under a business.

@bwillb 2 года назад

Ryan, Great details. Explained in common terms with straight talk. Thank you so much!

@binhvong5297 3 года назад

Hi Ryan, thanks for the great details, very informative! One question: what if you moved out of your primary residence, convert it to a rental, many years later move back in to uses sec. 121. Do you only pay taxes on the depreciation recapture like you mentioned, or do you split the whole profit between the time you lived there and when it was a rented?

@ednasalinas8280 2 года назад

Very clear explanation! I own a rental property under my LLC and will sell it in a few years. To avoid capital gains tax, I plan to move back to this property for 2 years as primary residence. My question: do I have to change the ownership from LLC to my name in the deed in order to claim the exemption? Keep up your good work, I do learn from your videos.

@jamescrenshaw5097 Год назад

I know this does not seem to apply to your facts, but there is another YT video with a plan when you have a primary residence that qualifies for the exemption and you are going to convert to a rental property, designed to preserve the benefit of the exemption for whenever you do sell it. The owner forms an S Corp (or LLC that elects S status) and sells the property at fair value for a note payable over time to the S Corp. Although the note qualifies as an installment sale, the owner elects out of installment method, which causes all the gain to be recognized in the year of sale....and excluded under the primary residence exemption. It also give a basis step-up to the S Corp. The S Corp then uses the rental income it gets to repay the note to the owner. Then when sold later by the S Corp, the gain is based on the basis step-up, so the exclusion is effectively used then to lower the tax upon sale.

@jpowell5529 2 года назад

Presented very clearly, but I also believed the capital gains would be prorated. Years as rental versus owner occupied. Also what about prior to 2009 …considered “qualifying” even though property a rental

@ZZLZ-cj8tl 2 года назад

Excellent! Very good information. Five Stars*****.

@vinay108322 2 года назад

Thanks. Good information. Unfortunately nowhere I am finding information on sale of Primary residence in Foreign country especially those who migrated from other countries to US due to the employer moving them here, not used their house back in their home country for a while and now selling it post Green Card processing. Any video coverage on this topic would be highly appreciated

@rivertran5138 2 года назад

To Keith Wallace. My CPA said the same thing like you said " If it was originally a rental, you get a prorated tax exclusion amount based on percentage of years as primary vs total ownership time". Is there a way that Ryan can clarify. Thanks so much for very informative and knowledgeable all video you Ryan has been provided.

@seattledan 4 месяца назад

Great explanation. What about doing a 1031 exchange, I move in and officially pay rent myself for a year and then make it a primary residence? Is this legal? Ultimately, I want to sell my rental and buy and move into my forever home

@siuivy3827 3 года назад

Hi Nguyen, pls help, I was sold out my rental property , it has purchase in 2014 $100,000 and 2021 $210000 sold out, the repair cost is $50,000 and depreciation is $3,000/pre yr ,we have no W2 , only day trade stock for investment and we are MFJ tax rate so how to calculate the capital gain? Thanks

@friscoray2 2 года назад

Thank you for the great info.

@lourdesjereza4399 3 года назад

Very informative video. Thank you. I own a rental property for 10 years now and depreciation was only deducted for 5 years. I think my tax preparer is using turbo tax. I am not ready to sell yet. What should I do now?

@susansong343 2 года назад

Very useful, thank you.

@jennyli2975 2 года назад

Hi Ryan. Can you do tax for ca properties?

@marianellamedelius8345 Год назад

Thanks for the video. Where in my prior tax returns can I find out I’ve taken advantage of depreciation? I did my taxes in turbo tax and I will sell my rental this year. Thanks!

@1mw4tch1ng 11 месяцев назад

siblings own a house purchased in a days when house prices is at $40K in mid 70s. Now, we are planning to sell and non of the siblings live in it over 5 years but one of the siblings son does. once we sell the property cap gain will be split equally among the siblings. How can I reduce cap gain taxes or not pay taxes on my share of the cap gain? Can I put my share in my existing Roth IRA to prevent cap gain?

@Carolyn-vh4nz Месяц назад

Hello I read online that if you bought your home Prior to Jan 01, 2009 none of this being in the home 2 of 5 years apply to you. For example if I bought my house in 1999 (which I did), and lived in it for 7 years t hen rented it out , (still rented today), none of this should apply to me and im grandfathered in and can keep any profits I make...is this true? How do you interpret this rule?

@melhoresprodutos8899 Год назад

Hello, very nice information in this vídeo☺. But my question is: If I how Foreigner Investor and I Buy the house for real estate rentals and After One Year I SELL this property ,ok. Well, I saw once that we have several benefits, both in paying less taxes to the IRS in the Lease as a passive gain and also if I sell after 1 year I can have exemption of more than 40,000 dollars per partner of an LLC, that is if I buy a property for let's say 300,000 dollars and I'm going to rent it (it's not for leisure or personal use) and in 15 months I'll sell it and suppose I put the house in an LLC with 5 partners, ok? So in a sale for say 500,000 dollars you would be EXEMPT from paying Capital Gain Taxes to the IRS, because in this case, as it is passive income, the IRS currently grants around 42,000 dollars of Exemption per LLC partner, ok? so it would be 42kx5 LLC PARTNERS = 210K exemption, So a capital gain of 200,000 dollars would be exempt from taxation, right? Is that right or did I miss some information?🤔🙄

@JC6352 6 месяцев назад

So, standard deduction is used to determine capital gains tax bracket? I thought it wasn't used, and it was the total of ordinary and capital gains. I am I wrong or missing something?

@ilianasamayoa9512 25 дней назад

Where are located? Do you have a physical business open to clients?

@alexmarks4593 2 года назад

Thanks for this, I'm confused about the 2 of the last 5 years in regards to a property that did not start as a commercial property. You made this distinction at 11:15 in the vid . So if the first two years are residential and then intermittent use after that and it is sold with the property being lived in 2 of the last 5 years can I still avoid 500K in cap gains married? Also in the years I am a resident would I still depreciate?

@stanleymason5837 2 года назад

Great video

@ryanshannon7703 3 года назад

Excellent information, sir! You are an under recognized knowledgebase of YT!

@NguyenCPAs 3 года назад

Thank you for the kind words!

@shorts_luv7634 Год назад

How do I reduce what I pay for capital gain.i sold a rental property .I sold for 200,000 .I bought property for 193,000 15 yrs ago.The last time i in a sold my townhone I paid 20,000 last year.my husband and I file jointly. I do not work.my husband makes 100,000 per year.any way to offset what I owe or redu cents what I owe. Thanks so much

@matt88997 2 года назад

Hello I just sold my rental and have $100,000 profit ( 15% capital on it) after paying the 15% capital gain tax, will the rest of my profits $85,000 be added to my earn ordinary income and pay taxes again Thanks

@EvenaGirlCanDoIt 2 года назад

Cap gains are separate from ordinary income

@ernestogomez19 2 года назад

Hi Ryan very informative video. I too like many here am considering selling my rental however am retired and I heard that the capital gains on this sale could possibly cause my medicare premium to go up for 2 years. Since this is not considered ordinary income how is this possible?

@NepaliNomad1234 3 года назад

Wow nice information bro 😎

@NguyenCPAs 3 года назад

Thank you!

@knickemup5117 3 года назад

I rented my primary residence for the past 5 years and bought a condo for 212k. It's a single family home I bought it for 180k. Sold it for 350k. I stand to make 200k profit after all fees. Do I have to pay capital gains tax on the full 200k or 20k (200k profit minus 180k I paid originally)? Also can I make my condo a rental and do a 1031 exchange. Then to buy another single family home to make my primary? I hope that I explained this properly and that it all makes sense to you. Thank you for any help in advance.

@terryharvey1109 2 года назад

What if you sell your rental for less then you paid for it. Is there any taxes you have to pay?

@NguyenCPAs 2 года назад

There won't be any capital gains but there might still be depreciation recapture.

@bernadette1128 3 года назад

What if I lived in a home for 7 years, bought another one and decided to rent the previous one? How can I avoid paying capital gain taxes if I decide to sell in in a couple of years? Is there a way? I've heard scorp works in the situation

@NguyenCPAs 3 года назад

If you sell it within 5 years of moving away from it (since you've lived in it for 7 years already) then you should be able to trigger the section 121 exclusion.