Commercial
property is rising in value along with other
real estate
SARASOTA-Design firm Robinson Spry interiors
ran smack into the realities of the region's
commercial real estate market when scouting
around for new quarters earlier this year.
Reluctant to leave downtown Sarasota but unwilling
to pay escalating prices commanded by new prices
of selling, Robinson Spry Ended its search when
it discovered a vacant building at 423 N.LemonAve.
But even there, in the city's tenuously up and
coming Rosemary District, Robinson Spry had
to invest top dollar.
How to get tax break when selling part-time
home
About five years ago, my wife and I were given
a home in Florida. It is now worth about $800,000.
We use it four months each winter. If we sell
it, and buy another property worth the same
amount, is there a capital gain tax to be paid?
What is the best way to avoid paying capital
gain tax on our sale profit? - Maxwell’s.
Your first step is to determine your adjusted
cost basis of real estate investment returns.
If the property was inherited, your stepped-up-basis
is the property's fair market value on date
of decedent's death (or alternate date used
by the estate). If the property was a gift,
the bad news is your basis is the investment
adjusted cost basis (probably very low).
The cost of any capital improvements of investment
that you added during ownership should be added
to your original basic to arrive at your current
" adjusted cost basis."
Your second step is to determine the properties
approximate current market value, such as by
a professional appraisal or by checking recent
buying and selling prices of comparable nearby
homes.
If you sell the properties today your capital
gain or investment will be fully taxable. The
reason is you don't qualify for the Internal
Revenue Code 121 principal residence sale tax
exemption up to $250,000 (up to $500,000 for
a qualified married couple filing jointly).
Neither is the property eligible for an Investment
Internal Revenue Code 1031 tax- deferred exchange
because it is not held for investment or for
use in a trade or business.But you and your
wife can qualify for up to $500,000 tax-free
profits by making it your primary residence.
To qualify, you must have owned and occupied
it an "aggregate" two of the five
years before its sale. For full details, please
consult your tax adviser.
