Thursday, January 13, 2005 Brought to you by the California Association of REALTORS® TAX LAW CHANGES FOR CAPITAL GAINS AND CALIFORNIA REAL ESTATE WITHHOLDINGS With the start of a new year, recent changes to real estate tax laws may affect your clients' buying and selling decisions. One significant tax law change involves properties acquired through a 1031 exchange. For these properties, the Internal Revenue Service (IRS) has imposed a five-year ownership requirement for eligibility to the $250,000 (or $500,000 for married couples) exclusion from capital gains taxes. In a separate move, California's Franchise Tax Board has eased its real estate withholding requirements by no longer requiring one as long as a seller's last use of the property being sold was as his or her principal residence. Here's a hypothetical situation to illustrate how these new rules work. Let's say, in 2001, Tami Taxpayer acquires a rental property through a 1031 exchange, and then, in 2003, she moves into that property as her primary residence. What are the tax consequences if she now sells the property in 2005? First, even if Tami has lived in the property for two of the last five years, she may not qualify for the $250,000 exclusion from capital gains tax when selling her home. As of October 23, 2004, a taxpayer who acquires property through a 1031 exchange is not eligible for the $250,000/$500,000 exclusion for the first five years of owning that property. Here, Tami is not eligible because she's only owned her property for four years. For more information about this rule, C.A.R.'s Legal Department has recently updated its legal memorandum titled Capital Gains on Real Estate Sales. Second, despite this potentially onerous tax liability, Tami is exempt from the requirement that 3 1/3 percent of the sales price be withheld from her proceeds. As of January 1, 2005, a new exemption from the California withholding requirement is available for sellers whose last use of the property was their principal residence, regardless of the two-of-last-five-years requirement. For more information, go to C.A.R.'s newly revised legal memorandum titled California Withholding on the Sale of Real Property . In addition, C.A.R's updated standard form "Seller's Affidavit of Nonforeign Status and/or California Withholding Exemption" will be released shortly. Realegal® is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 155,000 REALTORS® statewide. Real estate tax laws changes (2005) may affect your buying and selling decisions. |
"The opportunity for doing mischief is found a hundred times a day, and of doing good once in a year." - Voltaire MORE
Thank You for using www. CondoHouse.Com to find out about homes for sale, sold homes, real estate, and fun things in Ventura County. I will help you with all your Real Estate Needs! - Contact David L. Walker REALTOR ® Broker 805 - 377- 0897 "I answer my own phone" CondoHouse@gmail.com Email at David@CondoHouse.Com AOL -Friendly Email Address Home | Ventura Homes | Ventura Condos | Ventura Beach Oxnard Homes | Oxnard Condos | Oxnard Beach Camarillo Homes | Links | Home Buyers | Home Sellers MLS Listing | My Listings + David L Walker Contact
David L Walker REALTOR ®. All Rights Reserved For Ventura County Real Estate Information Call David Lee Walker REALTOR ® State of California, Department of Real Estate "Real Estate Broker License" Identification Nunber 01124599 805 - 377 - 0897 Home Office 805 - 486 - 3030 E-mail condohouse@gmail.com This site, built, maintained and updated by David Lee Walker REALTOR ® "The Internet Broker" of Ventura County, e-PRO CondoHouse Realtors
Last Modified on Saturday May 19, 2012, 7:55 AM Day 140 of 2012 38.2 226 Days Left in this Year 61.7 Sunrise 5:51 AM PDT - Sunset 7:55 PM PDT Daylight: 14 Hours 04 Minutes / 2 Minutes More than Yesterday Longest Day June 21, 2012 - 14 Hours 26 Minutes Shortest Day December 21, 2012 - 9 Hours 52 Minutes Ventura County Beach and Coastal Weather 50 years of Ventura Weather History DAVID LEE WALKER, Realtor 805 - 377 - 0897 condohouse@gmail.com |