Mind Your Taxes

In California, we have several different tax laws that deal with the profits and proceeds from real estate transactions. Double checking with a CPA is always your best bet as everyone’s tax scenario is different. Here are a few of the basics. If you have lived in your home and claimed it as a principal residence two out of the last five years you may take $250,000 ($500,000 as a married couple) tax free in profit. The rest may be susceptible to capital gains depending on the expenses you incurred while you owned the home. For rental and investment properties, there is a tax benefit known as a 10-31 exchange. This program allows you to roll over the proceeds of your sale into another “like” property with in 45 days, without holding anything for taxes. The caveat to this is that any proceeds taken in the form of cash are susceptible to capital gain. Savvy investors use this tax loop hole to buy and sell investment properties without paying taxes until he liquidates.

To find out more information about taxes, please call 310-867-3579 or visit the contact page.

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