Question on capital gains on selling investment house.

[runner15]

What is the name of your state? Florida.

My question is:

If you sell an investment property and you have a capital gain $150,000, I know you can do a 1031 delay, but you also have a line of credit lets say for example of about $100,000 and you sell for $250,000. You withdrawal the $100,000 line of credit just before you sell the house. Now I would like to know is it a $50,000 gain since the sale is paying off the mortgage and line of credit.

DWhat is the name of your state?

 

[tranquility]

The basis calculation on a tax free exchange takes into account debt given and received. "Paying off the mortgage" is irrelevant to the income calculation which basis and boot will be based upon. You will get no advantage from doing things as proposed.

 

[LdiJ]

What is the name of your state? Florida.

My question is:

If you sell an investment property and you have a capital gain $150,000, I know you can do a 1031 delay, but you also have a line of credit lets say for example of about $100,000 and you sell for $250,000. You withdrawal the $100,000 line of credit just before you sell the house. Now I would like to know is it a $50,000 gain since the sale is paying off the mortgage and line of credit.

DWhat is the name of your state?

Tranq answered you accurately but I am going to put it in more basic terms.

Capital gain or loss is selling price, minus original purchase price, minus cost of improvements, minus selling costs.

Mortgages, loans, and equity cash outs have nothing to do with capital gain or loss.

Someone who owned a property for many years could have a large cash proceed from selling the property, but could still have a capital loss.

Someone could end up having to fork over money at closing, but due to mortgages and equity loans, could still have high capital gains, and therefore high capital gains tax.

 

[runner15]

You are correct I still will have a, $250,000 sell price minus $100,000 purchase price,$150,000 capital gain even if I withdrawal $100,000 from a line of credit. I will have to do a 1031 delayed exchange on the $50,000 so I do not pay capital gains on the whole $150,000. I should have see it when I wrote out the question. Well thank you for the information tranquility and LdiJ. Have a great weekend.

D

 

[LdiJ]

You are correct I still will have a, $250,000 sell price minus $100,000 purchase price,$150,000 capital gain even if I withdrawal $100,000 from a line of credit. I will have to do a 1031 delayed exchange on the $50,000 so I do not pay capital gains on the whole $150,000. I should have see it when I wrote out the question. Well thank you for the information tranquility and LdiJ. Have a great weekend.

D

You still don't understand how it works...please consult a local tax pro.