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How can I avoid capitol gains?

Camarillo, CA |

I am currently married. I own 7 homes, one is my permanent resident the other 6 are rentals. All of these homes were purchased pre-marriage about 30 years ago and are in my name alone. My wife and I were talking about what to do with these homes. She would like me to sell them off now (one/two a year). But it is my understanding if I wait for her to sell them after I die she won't have to worry about capitol gains. What are the consequences? Any advise is greatly appreciated.

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Attorney answers 4

Posted

There are several options. One is a 1031 Like Kind Exchange. You could exchange several houses for one larger property (such as a strip shopping center) that may be easier to manage. Another choice is to sell the properties with the least gain first. Then, hold on to the remaining properties so there is a stepped-up basis on your death.

Please talk to a good tax and estate planning attorney to help you with this.

Ron Cappuccio
www.SaveYourEstate.com
www.TaxEsq.com

If you do not like this answer or disagree, please look at one of the other answers provided. It is not necessary for you to try prove this answer is "wrong" or something with which you do not agree. This is a free service for you based on limited facts. Nevertheless, many times you need to consult an attorney with the details to get actual advice specific to your concerns. Do not put too many details in your questions or comments because this makes the information public and could hurt you. Government Regulations contained in IRS Circular 230 regulate written communications about Federal tax matters, including e-mail, between us and our clients. This is another attempt by the government to limit your rights and to extend the control of government over individuals and businesses. Nevertheless, such communications are either opinions or other written communications. This is not an opinion. It is other written communication and was not written to be relied upon, by itself, to avoid any tax penalties. In order to receive assurances of protection from tax penalties from a written communication, you should get an opinion letter. If you would like to discuss an opinion letter relating to any matter, please contact me and I will explain what is involved and what it will cost.

Posted

I agree with counsel. You need to sit down with an experienced estate planning and tax lawyer to talk about the various options available to you. Two basic points:

a) do not let the tax tail wag the dog;
b) if all else is equal (valuation, expected appreciation, etc.) and you do not want to engage in sophisticated estate planning, the most basic thing you can do is to sell off the high-basis properties first and then get the step-up in basis on the low-basis properties you still own when you pass away. Good luck to you.

This information is presented as a public service. It should not be construed to be formal legal advice nor considered to be the formation of a lawyer/client relationship. I am licensed in Connecticut and New York and my answers are based upon the law in those jurisdictions. My answer to any specific question would likely be different if I were to review a client's file and have the opportunity to interview the client. Accordingly, I strongly urge you to retain an attorney in your jurisdiction with respect to any legal matter.

Posted

Under current rules the houses will avoid capital gains (or most of it) if they are transferred at death. Of course, if you need the money from your investments you may just have to take the tax hit (the down side if any of owning appreciated real estate!). I would also note that having this many properties in your personal name is risky from a liability perspective - you should also consider the pros and cons of placing the property in an LLC/LLCs if you decide to hold onto them.

This is not legal advice nor intended to create an attorney-client relationship. The information provided here is informational in nature only. This attorney may not be licensed in the jurisdiction which you have a question about so the answer could be only general in nature. Visit Steve Zelinger's website: http://www.stevenzelinger.com/

Kevin Samuel Sullivan

Kevin Samuel Sullivan

Posted

spend the coin and talk to a tax lawyer in person as you have a lot at stake. good luck.

Posted

This decision that can affect you and your spouse is a very serious one.
We can speculate and advise you but.... For you to have 7 houses definitely you know what you are doing. The issues that can arise from your effort to limit or even extinguish capital gains involve directly the IRS. If you are really serious about your question you need a serious expert advisor for that issue. Someone that understands economics math taxes specifically tax fraud and evasion and is also a lawyer. some of us in avvo are fraud examiners and economists and we can help you.
Serious decisions need serious advisors

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