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Capital-gains myth busted

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Real Estate Professional | 19 Aug 2015, 08:15 AM Agree 0
The growing number of rental property owners looking to minimize capital gains taxes at the point of sale may be in for a rude awakening and a hefty fine, cautions one property expert
  • | 19 Aug 2015, 12:33 PM Agree 0
    Here's the moral to this story. Don't lie.
  • | 19 Aug 2015, 12:50 PM Agree 0
    Could the editor of this article proof read before print - the statement that you are only allowed one tax free transaction being your principle residence, and that is correct but you should have clarified how many times a person is allowed to sell that principle residence.
    Once a year, 5 times a year or if truly your principle residence and a sale happens befores a reasonable amount of time occupying that home happens CGT may apply but also may not and simply put flip houses not used as a principle residence is subject to tax.
  • | 19 Aug 2015, 02:20 PM Agree 0
    There is a huge difference between the words "principal" and "principle".

    Principle is: a fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.

    Principal sum is: the original amount of a debt or investment on which interest is calculated

    .... (according to Wikipedia)
    Education & organized religion
    Principal (academia), the chief executive of a university or college
    Principal (education), the head teacher of a primary or secondary school
    Principal or dean, the head of a cathedral or collegiate church

    Principal (commercial law), the person who authorizes an agent
    Principal (architecture), licensed professional(s) with ownership of the firm
    Principal (criminal law), the primary actor in a criminal offense

    Principal, Cape Verde, a village
    Principal, Ecuador, a parish in Azuay Province

    Other uses
    Principal (computer security), an entity that can be identified and verified
    Principal (finance), the face value of a bond
    Principal sum, the original amount of a debt or investment on which interest is calculated
    Principal or principal officer, the senior management level in Her Majesty's Civil Service, UK
    Principal or Diapason, an organ stop on a pipe organ
    Principal, the lead musician in a section of an orchestra
    Principal Financial Group, a life insurance company traded on the NYSE
    The Principal, a 1987 action film
  • | 19 Aug 2015, 04:58 PM Agree 0
    Not withstanding prior comments, the article is a good reminder to those who are trying to avoid tax implications on real estate sales.
    I suspect this issue it not limited to real estate sales, but that is another article.
  • | 20 Aug 2015, 11:37 AM Agree 0
    wow principle guy, ewe must have alot of thyme on you're hands.
  • old timer | 27 Aug 2015, 04:45 PM Agree 0
    I addressed this situation once with a tax man doing an internal audit. I am a Realtor but also owned a construction company. I would move into one of my new homes....stay for a couple of years and then sell claiming it to be my permanent residence. The answer I got:
    the taxman turns a blind eye to 'legitimate' transactions. However, if some of your income is derived from selling real estate, and or a construction company you own and operate, it might well be your house sale does not qualify because your are in the business of buying and selling real estate. He defined a 'legitimate' house sale as: your owner occupied residence. I was told there is not a time limit that you must live in your home. IF, that is a big IF you can justify the sales you might be allowed to sell more then one home you have occupied in a year. By justification he meant: reason for selling other then to make a profit. i.e. bad back and stairs cause medical problems, wife left and the house is now too large, etc. My Realtor associate bought and sold 5 houses in a 7 year period and he got audited. They considered all 5 houses as a 'business' because he was in the business of selling houses and dis-allowed the
    tax free sales of all 5 houses. So, theoretically, when your circumstances are analyzed, you may not be able to sell even ONE house without paying the tax. Make sure your 'sales story' is both 'believable' and 'legitimate' BEFORE the tax man pays you a audit visit.
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