All Forum Posts by: Zach Helms

About to list our home. It is a new build that we unfortunately won't be living in due to job relocation. That being said I'm looking for listing price advice. The home appraises for around $525k. One realtor thinks we should list at $500k to hit that 450-500/500-550 search. Another says we list at $514,900. I'd like maximum return and try to get closer to 550k, though I understand it's a far fetch. This is a lake home in a very nice neighborhood with not many similar comps to compare. Any advice?

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Originally posted by @Natalie Kolodij:

Originally posted by @Zach Helms:

Originally posted by @Natalie Kolodij:

Originally posted by @John Teachout:

I presume renting it isn't an option? If you rented it and then moved into it later, you could possibly avoid even the capital gains taxes. (may have some depreciation recapture though). Or do you think it unlikely that you would ever move back there?

That doesn't work.

If a property is a rental first, and then a primary the 121 exclsuion is limited to qulifying use.

Basically the time in which value accumulated while it was a rental is excluded from the 121 gain exclusion.

So if you rent a home for 5 years, then occupy it for 2. Only 2/7 of your gain qualifies for 121 tax free exclusion.

Natalie, one last question. Does the start of my ownership begin when I first purchased lot (October 2018), or when I receive the Certificate of Occupancy when the home is completed?

For the 121 exclusion you need to BOTH own and occupy

So your ownership starts when you bought the land I'd guess

But you need to occupy/reside in the home as well- so really your timing would start on the date you moved into the home.

Ok that makes sense. I can't afford 2 house payments so we will be selling the house as soon as I get the Certificate of Occupancy.

Now as far as Capital Gains goes, I need to own for over 1 year....does the clock start when I purchased the lot and began building...or when the home is completed? Or does does Capital Gain not even apply to this situation?

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Originally posted by @Natalie Kolodij:

Originally posted by @John Teachout:

That doesn't work.

If a property is a rental first, and then a primary the 121 exclsuion is limited to qulifying use.

Basically the time in which value accumulated while it was a rental is excluded from the 121 gain exclusion.

So if you rent a home for 5 years, then occupy it for 2. Only 2/7 of your gain qualifies for 121 tax free exclusion.

Natalie, one last question. Does the start of my ownership begin when I first purchased lot (October 2018), or when I receive the Certificate of Occupancy when the home is completed?

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Originally posted by @Natalie Kolodij:

Originally posted by @Zach Helms:

Purchased a lot and have been building a home for my family for over a year. I relocated jobs to be closer to the new location (2.5hrs away from previous location; St. Louis to Camdenton, MO). Home is getting closer to completion but since then my wife had some medical concerns and we had to relocate back to our original city of St. Louis to be closer to her specialists; and I have also relocated jobs back to the St. Louis area.

We intended to live in this home as evidence by relocating jobs, selling home in St. Louis, and moving to Camdenton while building this home. My question is how can I tax shelter myself? Are there any ways to claim this profit as capital gains vs income tax?

We will have about $430,000 into the home and it should sell for $500,000-$550,000; looking at a profit of $70,000-$120,000.

My CPA told me in his eyes this is a Spec home and will be taxed as normal income. Any way to shift this to Capital Gain to lessen the tax I pay? Thanks

Your CPA sucks.

The IRS bases it on intent.

This is the exact definition of when a "flip" isn't one and should be taxed as capital gains, not ordinary income.

Did you buy and flip any other properties? Or build and sell any other properties in 2019?

If no, and this was a one off, you can show it was meant to be a primary, this is capital gains.

You weren't trying to operate a business. If you can/ could occupy the finished home for a small amount of time it could potentially be sold tax free since the 121 exclusion (normally 2/5 years) has some exceptions for health reasons, unforeseen circumstances basically.

Also though- you're not accounting for selling fees which will also reduce your gain.

Thank you Natalie. Very helpful. No, I am a flight Nurse by trade. This whole "being the General Contractor" building a house thing was tough. This was the first time I've ever built a house.

Ill definitely be looking for a more knowledgeable CPA, you really seem to know your stuff. I'll look into the 121 exclusion. Thanks again for everything!

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Any advice?

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We will have about $430,000 into the home and it should sell for $500,000-$550,000; looking at a profit of $70,000-$120,000.

My CPA told me in his eyes this is a Spec home and will be taxed as normal income. Any way to shift this to Capital Gain to lessen the tax I pay? Thanks

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All Forum Posts by: Zach Helms

Zach Helms has started 2 posts and replied 6 times.

Post: List price $500k vs $514,900 vs $525k vs $550k?

Post: Tax Advice: Building a home but need to sell due to job & health

Post: Tax Advice: Building a home but need to sell due to job & health

Post: Tax Advice: Building a home but need to sell due to job & health

Post: Tax Advice: Building a home but need to sell due to job & health

Post: Tax Advice: Building a home but need to sell due to job & health