Author Topic: Tax saving ideas for cash from selling a rental home  (Read 1417 times)

TwistedEther

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Tax saving ideas for cash from selling a rental home
« on: August 17, 2018, 09:09:56 PM »
Hello everyone!  First time posting here :-)
I recently sold a house that I was renting all this time.  I understand I don't get the same tax benefits as someone who had the house as a primary residence. So now I am stuck with a nice little windfall. Not too big but decent sized. Enough to leave me wondering how can I save myself from a big tax bill that will be due next April.  Any thoughts or ideas on what I can do to help reduce my taxes?  I know I can reduce or avoid some of the taxes by "rolling over" into a similar type of investment within 180 days.  But with the real estate market too hot in bay-area, I don't want to reinvest at this time.  Plus I would rather diversify my exposure since I have one more property.
« Last Edit: August 17, 2018, 10:06:51 PM by TwistedEther »

MommyCake

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Re: Tax saving ideas for cash from selling a rental home
« Reply #1 on: August 18, 2018, 04:53:12 AM »
Can you use some of it to make repairs/upgrades to your other property?  Maybe it could use a roof, windows, driveway could be repaved, kitchens updated, etc?

Another Reader

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Re: Tax saving ideas for cash from selling a rental home
« Reply #2 on: August 18, 2018, 06:43:51 AM »
To "roll over," that is to do a 1031 exchange, you had to start before the sale closed.  Once the money is in your hands, it's too late.  Tax planning should be done as part of the decision to sell, not after the fact.

Catbert

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Re: Tax saving ideas for cash from selling a rental home
« Reply #3 on: August 18, 2018, 11:15:12 AM »
To "roll over," that is to do a 1031 exchange, you had to start before the sale closed.  Once the money is in your hands, it's too late.  Tax planning should be done as part of the decision to sell, not after the fact.

Yep, nothing you can do now to change how much tax is owed on your sold rental.  You can do things like max out 401k/IRA accounts to reduce your other income. 

If you gains are substantial I strongly suggest doing a "mock" tax return now to see what you'll owe.  It's possible that significant capital gains will impact your ability get other write-offs.

elaine amj

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Re: Tax saving ideas for cash from selling a rental home
« Reply #4 on: August 18, 2018, 02:05:40 PM »
We just sold a rental property too - but never even thought about taxes! I just did a quick Google about tax implications here in Canada and turns out we sold it at the best possible time. Our income is temporarily very low this year so the capital gains will hopefully not hit us too hard. On the other hand, I really could use a boost in my taxable income on paper (for an application for something else) and this might do the trick. Looks like it was a win-win for us.

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