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we have a lake home that we are selling. It was not a rental property. I do not want to live there for two years, but would like to minimize the capital gain. Would any of the following strategies work?: Sell the boat dock separately from the home. We added the boat dock at a cost of $20K. Would like our buyer to purchase for $35k, therefore we would reduce the cost of the home by 35K. Sell the furnishings separately, we also added the furnishings and would like to sell for 15K and reduce the home price by 15K. Are there any disadvantages to us or the buyer for stucturing our deal this way?
Also, what about seller financing on the appreciated portion, is it still considered a gain if we set up as an installment loan?
Thanks for any insight!!
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we have a lake home that we are selling. It was not a rental property. I do not want to live there for two years, but would like to minimize the capital gain. Would any of the following strategies work?: Sell the boat dock separately from the home. We added the boat dock at a cost of $20K. Would like our buyer to purchase for $35k, therefore we would reduce the cost of the home by 35K. Sell the furnishings separately, we also added the furnishings and would like to sell for 15K and reduce the home price by 15K. Are there any disadvantages to us or the buyer for stucturing our deal this way?

From an income tax perspective all I can see is that you're increasing your paperwork and closing costs. Let's say that your total selling price for the house, dock, and furnishings is $100,000, and your total basis for everything is $70,000. No matter how you split it up, you're going to have a $30,000 gain, and if you somehow manage to arrange a component so you have a loss, you'll have an even larger taxable gain since losses on personal-use property aren't deductible.

These manipulations might affect real estate transfer taxes. You'll need to talk to someone locally for more information on that. (Remember that these transfer taxes affect your capital gain, so the lower the taxes the higher your gain.)

Also, what about seller financing on the appreciated portion, is it still considered a gain if we set up as an installment loan?

See IRS Publication 537 for information on installment sales.

TMF ExRO
Phil Marti
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Ask a good real estate attorney about using a Starker tax-deferred exchange and whether it would suit your uses. (You can search the web for information to get an idea of how it could be useful to you)
If you want the money immediately--it won't help. But if you would like to avoid 15% or 28% tax you can do it legally using the 1031 Starker exchange and then converting the exchanged property into your residence and avoid paying taxes on $250,00 to $500,000 of capital gains.
This is what rich people do all the time (That's how they got and stay rich :-)

DDeLong
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then converting the exchanged property into your residence and avoid paying taxes on $250,00 to $500,000 of capital gains.

Be very careful about this since the intent is clear to defraud on a tax issue. This has been pretty thoroughly discussed in the past on this board and the consensus is against this. I would do a search on 1031 exchanges, exchanges, to see all the threads on this issue before you make such a decision.
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