Homeowners get a big tax break when they sell: A capital gains tax exclusion

Homeowners get a big tax break when they sell: A capital gains tax exclusion

Homeowners already know the many tax breaks that Uncle Sam offers, most notably mortgage interest and property tax deductions. Well, he also has good tax news for home sellers: Most of them won't owe the Internal Revenue Service a single dime.

When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes.

"Most people are not going to have a tax obligation unless their gain is huge," says Robert Trinz, senior analyst with Thomson Reuters Checkpoint.

Here's why that buyer may not plan to live in your home

Here's why that buyer may not plan to live in your home

One out of every four homes sold in the Chicago area in 2016 went to buyers who don't plan to live in the property, a phenomenon that sneaked up on almost everybody. 

Just over 26 percent of the homes sold in 2016 in the metropolitan area went to small investors, according to figures Attom Data Solutions compiled exclusively for Crain's. The figure is up from 10 percent a decade earlier. The buyers include those who plan to rent the properties to tenants, rehab them for resale or use them as second homes.

2 Make-or-Break Rules for a Successful 1031 Exchange

2 Make-or-Break Rules for a Successful 1031 Exchange

Perhaps you have heard the term 1031 or like-kind exchange, or maybe you have already gone through the process before. Either way, before you jump into your next exchange, make sure that you know how to do it and what the potential tax consequences are without a 1031 exchange.

When it comes to rental real estate, 1031 exchanges are a great tax deferral tool. A 1031 exchange allows you to essentially “trade up” one property for another. The value of the property and the gain that you would have paid taxes on the sale are reassigned to the replacement property and may be deferred until the replacement property is sold. However, the strategy is only effective if done the right way, and unfortunately that oftentimes does not happen. Let’s take a look at some of the rules.

Reverse 1031 News

Reverse 1031 News

A “reverse” exchange occurs when the taxpayer acquires the replacement property before transferring the relinquished property. A “pure” reverse exchange, where the taxpayer owns both the relinquished and replacement properties at the same time, is not permitted. As a workaround, enterprising taxpayers structure “parking” transactions. An accommodation party (“AP”) would acquire and hold the replacement property until the taxpayer could transfer the relinquished property in a customary forward exchange. A major challenge of the parking arrangement was to give the AP enough benefits and burdens of the parked property to be treated as the owner for federal income tax purposes.

4 Rules of a 1031 Exchange

4 Rules of a 1031 Exchange

Let’s say you’ve got yourself a rental property and you’ve worked hard to get rents up and keep expenses low. The property is profitable, and you are looking to trade up by selling it and buying a more expensive property. The problem is that if you sell, you will have to pay capital gains tax on the sale as you would with a fix and flip or wholesale deal. That tax could be a heavy hit if you have sold the property for a gain, and it will stunt your growth as an investor. What can you do?

Rent In Elmhurst Has Skyrocketed More Than Anywhere Else In Chicagoland: Report

Rent In Elmhurst Has Skyrocketed More Than Anywhere Else In Chicagoland: Report

RENTCafe, a nationwide apartment search website, recently released its Chicago Apartment Market Report, which looks at town in Chicagoland that saw the highest jump in rental rates in 2016. The apartment complexes included in the survey were multi-family properties with 50 or more units.