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real property capital gain/loss

These may be simple enough, but I'd to get some suggestions -

Assuming I sold my primary residence for $100K LOSS and sold one rental property for $100K PROFIT, am I correct that:

1] If these two transaction happen in the same tax year, I pay no capital gain tax? (i.e. primary residence and rental property gain/ loss can be combined for tax purpose?)

2] In the above case, if the rental property is owned by a single member LLC (that's me), does it make any difference?

3] If the primary residence was sold last year, but the rental property was sold this year, I need to pay tax on $97K this year and spread the $97K loss over 33 years?

4] If I have to sell my primary residence and will likely have big capital loss, but without comparable sized capital profit to realize in the same year, what might be good strategy for tax purpose?

Thanks.

========================================= MODERATOR'S COMMENT: The first assumption is wrong. The loss on personal-use property is disallowed, so it cannot cancel other gains. No need to look at the other questions.

Reply to
STAREX
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The moderator is correct.

Reply to
Alan

Is it true even if the LLC is a disregarded entity or the rental is owned by an individual (instead of a LLC)? If it is still true, are there any "strategies"/"smart moves" to minimize the tax? Thanks.

Reply to
STAREX

Ownership structure of the rental is irrelevant since the loss on the sale of the primary residence cannot be claimed.

Ira Smilovitz Leonia, NJ

Reply to
ira smilovitz

The strategy I can think of is to move into the house that has increased in value, for at least two years. That way you can get the first $250,000 (double if married) of profit on that place tax free. Then you might be able to get some deduction on the other one if it's turned into rental property and you still take a loss on it. But you can't deduct your entire loss in most cases. ___ Stu

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Reply to
Stuart A. Bronstein

There is no way to gain any kind of tax benefit from the loss on the sale of your home, no matter how many ways you ask the question.

You can defer the tax on the rental gain by doing a section 1031 exchange for another property. I'd probably go ahead and take the hit now, since I doubt rates are going to get any lower. Unless you plan to hold the replacement property until you die.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

Thanks for all the replies. One more question: how to calculate the cost base (for capital profit/loss calculation) if one property is turned from residence to rental and vice versa? The two houses are both single family houses in the area (just bought at different time). So I don't mind moving into the one increased value and live for 2+ years and turn the existing one into rental. Is there anything might be "interesting" in such cases?

Reply to
STAREX

If you convert a property from rental to personal, the section 121 exclusion of 250k/500k is reduced. This is part of the The Housing and Economic Recovery Act of 2008. You have to do some sort of ratio of qualified use (where it was a personal residence) to non-qualified use (where it was a rental). The change went into effect Jan/1/2009.

Reply to
removeps-groups

You still wouldn't get the benefit of the loss since that property's starting point basis for depreciation and calculating gain on the ultimate sale would be the market value at the time you converted it to rental. See Pubs 527 and 550. For details about the dale of the home you would convert to your primary residence see Pub 523.

Phil Marti VITA/TCE Volunteer Clarksburg, MD

Reply to
Phil Marti

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