Private Home Builders

kid creole

does anyone out there take advantage of capital gains tax relief structures that allow you to build a home live in it for a certain amount of time and then sell it without incurring substantial taxes? if so hows it going for you? any advice or insight would be greatly appreciated.

copusbuilder

I have bought homes in need of repair and turned them over after a period of time. I have kids so it has been far from aggressive. I have made a sizeable profit on each home sold with my best profit being in the house I am currently in.

I know many people who do not mind the hassle of moving that do quite well.

I beleive it is 2 years of staying in the home??

Maybe others can chime in??

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www.etexasrentals.com
www.thelakevoice.com
AkA Richard Cranium

Grumpy

I've worked for a few so called remodelers who have done that. From my point of view it;d be a nightmare.... Who wants to live in a construction zone?!

Unless it were a two flat or something, no way in hell I am putting my family through that.

Big E

Yeah, the idea of pretty much being forced to move every 2 years or so makes it less desirable, but if you don't mind it, then its a heck of a loophole. Someone please correct me if I'm wrong, but I think it's no taxes on the first $250k (single) or $500k (married) as long as you've made that house your primary residence for at least 2 years.

Of course, if you were to buy a separate house, remodel, and sell within a year, it would fall under a short-term capital gain, which is only taxed at 15%, so about half of a regular income tax rate. My recollection is that the cost of materials and labor (not your own, though) to complete the remodel can be added into your cost basis, further reducing the taxable gain.

I'm contemplating doing this now (already have the house, just haven't settled on renting it out or reselling after the remodel).

Disclaimer - for God's sake, don't take my word on any of this!!!

copusbuilder

Thats the numbers I had thought but was not sure.
I always fixed mine up before we moved in, then bought another fixed it up, then fixed up the old one and sold them It is a definite windfall....

But we are taking your word for it

__________________
www.copusconstruction.com
www.etexasrentals.com
www.thelakevoice.com
AkA Richard Cranium

bmartin

I just finished my second house. I will sell this one the first part of next year without any capital gains. Considering the equity I have in this house and the last one I sold I figure I'm making over $80,000 after taxes a year on selling my residence. Not bad for nights and weekend work. I know alot of people who say they won't do it because of the headache but I figure 2 1/2years from now, after sale of the next house I will own my home without having a mortgage. Owning a $750,000 house outright before your 30 is worth some headache to me.

kid creole

thanks to all!
we will be building new homes in the 650's to 900's.
sorry if you all thought this was about renovations.and i do believe it is a year or two of dwelling. really this thread is for info on the actual trials and tribulations involved. tips or advice concerning the actual building of the homes.

yea like BMARTIN i have no probs moving every couple years with the potential of settling down in something really custom. besides the financier of this plans on building a whole sub-division in this manner.
so in reality moving will consist of going next door or across the street and so on.

really appreciate all of your advice and input.