I inherited an apartment just over a year ago (I was living in it before that also but ownership wasn't in my name). The housing market here is completely nuts and the apartment has appreciated quite a bit. What are the tax implications if I sell before I've officially owned it for two years? More than two years? I plan to buy something else immediately in either case.Thanks in advance.
If you sell before you have both owned and lived in the apartment as your principal residence, you will be liable for capital gains tax. Two years or more, and you may exclude $250,000 of gain if you're single. This is discussed in IRS Publication 523. In particular, there is an example given where a woman lives with her parents in a house for 6 years. She then buys it from them and lives in it for a further year. She has met the use criterion, but not the ownership criterion, and is liable for the tax if she sells.
I would investigate more before I sold the real estate. There are tremendous tax advantages to owning. Depreication is one. Think twice my friend selling is not the only way to benefit from real estate. AS a matter of fact More averages Joes have created well by buy and holding real estate than with stocks. See you got to sell or buy stocks to benefit from them. But not so with real estate.
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