1. How one client saved $129,432 on the sale of their house:
If you own a house that you're thinking of renting out later, pay attention children.
THIS is some good work right here!
OK, so a client of mine moved from California to Kentucky in 2011.
If you own a house that you're thinking of renting out later, pay attention children.
THIS is some good work right here!
OK, so a client of mine moved from California to Kentucky in 2011.
2. The price of his house was around $600,000 then because of the 2008 market crash, so he didn't want to sell it.
He had bought it in the early 2000's for $400,000.
So, he decided to rent it out.
He had bought it in the early 2000's for $400,000.
So, he decided to rent it out.
3. Now, as you may or may not be aware, if you're married, you can sell your principal residence and pocket $500,000 in gains TAX FREE
AS LONG AS: you live in the house for 2 of the last 5 years.
BTW, it's $250,000 if you're single.
AS LONG AS: you live in the house for 2 of the last 5 years.
BTW, it's $250,000 if you're single.
4. However, by 2014, the house was back to thevalue of $1,000,000, where it had been in 2007 before the market and housing crash.
But, he still wasn't ready to sell it, and the 2 of 5 years was almost up.
So....here is what we did:
But, he still wasn't ready to sell it, and the 2 of 5 years was almost up.
So....here is what we did:
5. We 'sold' his property to an LLC for $900,000.,
Which is $500,000 MORE than what he paid for it.
So, that was 500k of exemption that he did not LOSE, which he would have had we not acted.
That move saved him $100,000 in taxes at current capital gains tax rates.
Which is $500,000 MORE than what he paid for it.
So, that was 500k of exemption that he did not LOSE, which he would have had we not acted.
That move saved him $100,000 in taxes at current capital gains tax rates.
6. But wait, there's more!
Because the depriciable basis was now higher than it was previously, based on a $900,000 sale value, he got to depreciate $31,363 each year after we did this, vs the $14,545 he had been depreciating previously.
Because the depriciable basis was now higher than it was previously, based on a $900,000 sale value, he got to depreciate $31,363 each year after we did this, vs the $14,545 he had been depreciating previously.
7. At his ordinary income tax rates, that saved another $29,432 in taxes over the next 5 years.
So, ONE chess move, and we saved $129,432 in taxes.
Legally.
So, keep this in mind if you're going to be moving out of a property anytime soon, but aren't quite ready to sell it yet
So, ONE chess move, and we saved $129,432 in taxes.
Legally.
So, keep this in mind if you're going to be moving out of a property anytime soon, but aren't quite ready to sell it yet
8. AND, if you have NOT yet joined my tax savings course, we discuss a ton of practical ideas just like this to save you tons of money on your taxes.
You can join here and get the course for 50% off using code: newsletter
gum.co/MOlFr
You can join here and get the course for 50% off using code: newsletter
gum.co/MOlFr
9. By way of clarification, it was HIS LLC, so he ( and his wife) still owned it.
(Well, controlled it)
AND, we used a land trust so the mortgage didn't get called due.
So it was a paper move that saved all that money.
(Well, controlled it)
AND, we used a land trust so the mortgage didn't get called due.
So it was a paper move that saved all that money.
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