All Forum Posts by: Xavier Paredes

@Dave Foster Thank you! Would you kindly explain with an example what you mean by "...and then when you sell that property you get a proration of the gain tax free as well!!!!!"

I think I understand but not sure.

It helps. Thank you sir!

I've searched about this but am getting conflicting info or maybe just misunderstanding what I read.

Two months ago I sold my primary residence in Houston, Texas. Profit was about $100k. 

I file taxes as single.

QUESTIONS:

1. Will I have to pay capital gain taxes on the $100k profit?

2. Are there any time limits by when I must buy another house to prevent paying capital gain taxes?

3. I come across articles for a 1031 exchange but I think that only applies to investment properties. Correct?

4. I read somewhere that we can have the Title Company (which processed the sale transaction) put the money into a trust. Not sure what this is.

5. Anything else I must know?

Sorry for all the questions and for your patience.

TIA!

@Ashish Acharya Thanks for your reply. I forgot to mention that house #2 is fully paid for. Thus, mortgage interest deduction is obviously no longer in play—but even if there still was a mortgage, per this article, investment properties never qualify for mortgage interest deduction. 

This still leaves us with having to distinguish the house as either a "second home" or an "investment property" which is important in the eyes of the IRS. 

The confusion for me now is that some articles say that for a home to qualify as a second home the owner cannot rent it out for more than 180 days of the year while other articles say that it qualifies as a second home if the owner (a) uses it for at least 14 days of the year OR (b) the owner uses the home at least 10% of the days he/she rents it out (whichever results in the greater # of days).

Sources: 

https://www.fool.com/millionac...

https://www.valuepenguin.com/m...

Thanks for your help.

I have this question too. I'm surprised no one has replied. Hope I'm bumping it up.

Cheers!

I'm helping my mother figure these things out. Sorry for any rookie questions.

She owns 2 houses. House #1 where she lives, and house #2 which she rents to my sister.  

I've read that your primary home's property taxes are deductible. So that seems to be clear.

However, I'm not sure if property taxes are deductible for house #2. Are they? 

In case any of the following matters at all: 

1. My sister's been renting house #2 for several years but this question has just come up recently because I wasn't involved—until now.

2. My mother has been retired for some years now.

3. My mother doesn't have a formal landlord-tenant contract with my sister (she does pay rent on time though).

Again, sorry for any dumb question.

TIA!